Markets Live: ASX brightens up

Australia recorded a trade surplus of $1.1 billion in January after exports rose 4 per cent and imports fell 2 per cent, data from the ABS showed.

Economists had been expecting a trade surplus of $0.16 billion, according to consensus estimates compiled by Bloomberg.

The trade deficit recorded in December was revised to $1.1 billion.

The Australian dollar rose to US78.35¢ after the release of the data, up from US78.26¢.

The Australian dollar lifted after the data.

Photo: Karl Hilzinger

Japan's economy expanded at an annualised rate of 1.6 per cent in the final three months of 2017, revised up from a preliminary estimate of 0.5 per cent growth due to an upward revision to capital expenditure, the Cabinet Office said on Thursday.

The revised gross domestic product figure compared with the median estimate of 0.9 per cent growth in a Reuters poll of economists.

On a quarter-on-quarter basis, GDP rose a revised 0.4 per cent in real, price-adjusted terms. That compared with the initial reading of 0.1 per cent growth and economists' median estimate of a 0.2 per cent gain.

- Reuters

Customers browse in the vegetable section at a Sankei Super, K.K. supermarket in Tokyo.

Photo: Kiyoshi Ota/Bloomberg

Morgan Stanley says that ANZ is its preferred major bank, as it believes the lender offers a good cost story, an improving risk profile, up to $5.5 billion of buybacks, and a sustainable payout ratio.

"ANZ missed the margin sweetspot in 2H17, but we think it's less vulnerable to the emerging headwinds in retail banking," the broker said.

Broadly, Australia's major banks face a deteriorating revenue growth outlook and increased political and regulatory scrutiny, with little room to deliver a positive surprise on expenses, loan losses, capital management or dividends, the broker said.

However, ANZ's ROE, EPS and dividend outlook is more attractive than peers, the broker said, as it also noted downside risk to ANZ's margins in retail and institutional banking.

Morgan Stanley forecasts ANZ's revenue will fall around 2 per cent this year given a net $450 million headwind from asset sales and non-recurring items and a 2.5 per cent drag from lower markets income.

Underlying income growth should improve to around 3 per cent to 4 per cent in fiscal year 2019 but revenue from Asian retail and wealth operations will drop a further $750 million and forecasts rely on a moderation of Institutional margin pressure, the broker added.

ANZ shares were up 0.6 per cent at $28.38.

Morgan Stanley says ANZ is its preferred major bank.

The percentage of female board appointments spiked at the start of 2018, but further momentum will be crucial in order to reach a target of 30 per cent female representation for Australia's top 200 companies by the end of the year.

Women accounted for 47 per cent of board appointments across the ASX 200 companies in the first two months of 2018, up from a sluggish 36 per cent a year ago, and now make up 26.7 per cent of directorships, a new report by the Australia Institute of Company Directors (AICD) shows.

The findings, released on International Women's Day, show that the number of top 200 companies which have no women around the board table now stands at five, down from 14 recorded this time last year.

Galaxy Resources and Beach Energy both left the list earlier this year, but Pilbara Minerals has been named, alongside ARB Corporation, Speedcast International, Ardent Leisure and TPG Telecom, after entering the ASX 200 in December.

AICD Chairman Elizabeth Proust says the result marks the highest rate of female appointments to ASX 200 boards since the AICD began tracking gender diversity statistics.

Across the ASX 200, a total of 74 companies - such as Fortescue Metals Group, Medibank Private, Nine Entertainment and Woolworths - have reached or exceeded the 30 per cent representation target.

Labor MP Gai Brodtmann and Senator Kristina Keneally attend Deputy Opposition Leader Tanya Plibersek's International Women's Day address.

Photo: Alex Ellinghausen

The Australian share market rose in early trading, with banks rebounding as concerns over a potential global trade war eased a touch.

The S&P/ASX 200 index climbed 22 points, or 0.4 per cent, to 5924 while the All Ordinaries index advanced by the same amount in points and percentage terms to trade at 6027 and the Australian dollar traded at US78.17¢.

US stocks ended mostly lower but off their worst levels overnight after the White House said there would be carve-outs for Mexico, Canada and others, based on national security grounds.

Australian stocks tumbled yesterday after the resignation of key White House economic adviser Gary Cohn ratcheted up concerns that potential US metal tariffs will lead to a full-blown trade war.

Banks took the brunt of the selling yesterday but took back some of those losses on Thursday, with CBA up 0.7 per cent, NAB up 0.7 per cent, ANZ up 0.5 per cent, Westpac up 0.4 per cent and Macquarie higher by 1.3 per cent .

BlueScope Steel shares were up 1.8 per cent but metal extractors were broadly losing ground.

BHP fell 1.9 per cent, South32 lost 2.1 per cent, Newcrest traded down 0.8 per cent and Regis Resources fell 2.4 per cent.

Best and worst performers.

Leading female fund managers want more young women to pursue careers as investors, which is not only positive for correcting the gender imbalance within the industry, but has been proven to deliver higher returns because diverse investment teams outperform all-male ones.

Asset management faces another hurdle before women start their careers: the professional services firms and investment banks are so successful at recruiting women and projecting flexible and progressive workplaces that junior roles in funds management are still dominated by young men.

"The problem for us as an industry is that we're not doing enough to actually advertise our industry to the students that are coming out. The banks are getting them, the accounting firms, the management consulting firms, they're getting in ahead of the funds management industry," said Catherine Allfrey of WaveStone Capital.

"They just don't know our industry exists; I don't think we've done enough to promote it."

The custodians of capital are showing a willingness to change. The asset consultants and super funds need to "ask the same questions that we ask about boards and management teams of their investment teams," said Jacqueline Fernley, a portfolio manager at Colonial First State Global Asset Management, in the core Australian equities team.

One industry super fund has already stepped up. Hesta is surveying 70 of its Australian and international investment managers about their gender diversity from the analyst level to the investment committee. Hesta sees diversity as an indicator of a well-run organisation more likely to drive results. That means beating the market.

Vesna Poljak reports

From left: Jacqui Fernley, Catherine Allfrey, Kate Howitt, Anita Costa and Karen Jorritsma.

Photo: Louie Douvis

Hopes have risen that Australian steel and aluminium exports may be spared Donald Trump's tariffs after the White House said there would be carve-outs for Mexico, Canada and others, based on national security grounds.

With the US President expected to detail his tariff plans by the end of the week, White House press secretary Sarah Sanders flagged the carve-outs at a briefing overnight Australian time.

"There are potential carve outs for Mexico and Canada based on national security, and possibly other countries as well based on that process," she said.

"That would be a case-by-case and country-by-country basis, but it would be determined whether or not there would be a national security exemption."

When George W Bush imposed tariffs on steel in 2002, Mexico and Canada were spared due to them being signatories to the North American Free Trade Agreement.

Australia has been arguing for an exemption on national security grounds and on the basis it is a strong defence ally.

Earlier this week, trade hawk Peter Navarro, director of the White House's National Trade Council, said while there would be no country exemptions, there was scope for exempting individual businesses from the 25 per cent levy on steel and 10 per cent levy on aluminium.

Phillip Coorey reports

Steel coils sit on wagons at a German factory.

Photo: MARTIN MEISSNER

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Here's IG Markets' Chris Weston on what to expect from the markets today:

There are still too many unanswered questions to think it safe to increase exposures to risk assets with any real conviction, and my view that Monday's 1.1% rally in the S&P 500 was "unconvincing" is one that I continue to hold here.

The overnight session, and the effective lead for Asian markets today is clearly less negative than feared.

There is little inspiration to be taken from the moves in the S&P 500 sub-sectors where financials, materials and energy are all lower by 0.3% or more and most of the index support has come from US tech.

Energy has been the noticeable underperformer and this is clearly a reflection of a 2% fall in crude, with the barrel falling into the low $61 area.

If S&P 500 implied volatility is telling us anything it is that traders are not convinced this trade saga morphs out into a genuine vol event like we saw in 2002.

That said, let's keep an eye out for the formal announcement, which is due either tonight or Friday. This should be interesting as the facts are what the market craves.

The focus also comes at a time when the market has to navigate itself through tonight's (23:45 aedt) ECB meeting and tomorrows US payrolls and wage data.

One could argue the market will be eyeing China trade data. The fact economists are expecting a trade deficit of $5.7 billion is interesting.

Perhaps it is not so much about the absolutely level of China's trade data but whether their $21.8 billion trade surplus with the US heads lower and appeases Donald Trump and the likes of Wilbur Ross and Peter Navarro.

Read more here

Wall Street rebounded somewhat in the final hour of trading amid thin volume as a winter storm battered the US east coast.

Both the Dow and the S&P 500 ended the day lower while the Nasdaq drifted higher.

Investors spooked by the departure of pro-trade adviser Gary Cohn took solace in comments from White House Council of Economic Advisers chairman Kevin Hassett that indicated the trade policy is not yet finalised.

White House spokesperson Sarah Sanders said "there are potential carve outs" for the northern nation in the coming tariffs.

Trade angst still set the tone in US equities, with multinationals in the Dow Jones Industrial Average leading declines, while domestically focused small caps paced gains.

Treasuries pared an advance to trade little changed, while Bloomberg's dollar index fell versus the Canadian dollar and gold, oil, copper, aluminium and iron ore all were lower. Aluminium lost 2.3 per cent.

European shares clawed back losses on Wednesday as deal-making speculation reinvigorated trading following a muted start to the session.

The pan-European STOXX 600 index ended with a gain of 0.4 per cent, after climbing steadily through the day.

Shares in tech stocks led gainers with a 1.2 per cent rise, while autos advanced 0.6 per cent.

Renault was the biggest auto gainer, up 5.6 per cent following a Reuters report that Nissan was in talks with the car maker to buy the bulk of the French state's 15 per cent Renault holding.

Trader Robert Oswald works on the floor of the New York Stock Exchange.

Photo: RICHARD DREW

All the overnight market action in numbers:

• SPI futures up 22 points or 0.4% to 5919 at about 8.25am AEDT
• AUD -0.1% to 78.20 US cents
• On Wall St: Dow -0.3%, S&P 500 -0.1%, Nasdaq +0.3%
• In New York, BHP -1.7% Rio -1.2%
• In Europe: Stoxx 50 +0.6%, FTSE +0.2%, CAC +0.3%, DAX +1.1%
• Spot gold -0.8% to $US1324.24 an ounce
• Brent crude -2.1% to $US64.42 a barrel
• US oil -2.2% to $US61.21 a barrel
• Iron ore -0.3% to $US75.84 a tonne
• Dalian iron ore -1.3% to 513.5 yuan
• LME aluminium -2.3% to $US2098 a tonne
• LME copper -0.8% to $US6950 a tonne
• 10-year bond yield: US 2.88%, Germany 0.65%, Australia 2.79%

On the economic agenda today:

• Trade balance January
• China trade balance February
• Japan fourth quarter GDP final
• ECB policy meeting
• German factory orders January

Stocks to watch:

• European Lithium Rated New Add at First Berlin
• Saracen Mineral Rated New Hold at Global Mining Research
• Ex-dividend: ASX, BFG, BHP, BPT, BRG, BST, DGH, FXL, GCS, GEM, GLB, JIN, KME, LIC, MAI, MVF, MYO, PME, PNI, QBE, RRL, RWC, S32, SFC, SRV, VEE, VLW, YTMMGR

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