ASX closes week higher as AMP falls

The Australian sharemarket closed higher for the week despite recording a modest fall on Friday, as AMP shares fell almost 10 per cent for the week.

The S&P/ASX 200 index closed down slightly on Friday, falling 2.5 points, or 0.1 per cent, to 6,116.2. The index was up for the week, however, recording a weekly gain of 53.3 points, or 0.9 per cent.

Australian shares advanced this week on trading updates and rising oil prices.
Photo: Sasha Woolley

AMP shares have fallen to their lowest point since 2012 after posting a big loss on Friday. There had appeared to be shareholder optimism as the company's AGM on Thursday before falling to $3.73 at the week's close, down 9.9 per cent for the week.

Higher oil prices supported the energy sector this week while other companies rose and fell on trading updates.

Oil Search announced at its AGM on Friday that 2017 net profit had been $US302 million, more than three times 2016 NPAT. Increasing oil prices also supported the stock's 7.2 per cent rise for the week to finish at $8.50.

Janus Henderson's shares were up 8.9 per cent for the week after it announced a profit increase of 40 per cent for the first three months of 2018. It closed the week at $45.20.

Wisetech Global shares rose this week despite three broker notes giving the stock a sell recommendation. Its share prices has risen more than 30 per cent since it lifted its revenue target on May 1. Shares rose 9.2 per cent this week to finish at $13.41.

Blackmores shares climbed 7.7 per cent this week to $128.41. Short interest in the stock rose 9 per cent during the previous week after it reported that China quarterly sales were down.

Pendal Group's shares advanced after it announced on Thursday it had delivered a record half year profit. The stock finished the week up 5.3 per cent at $10.19.

Greencross plummeted this week after it announced a 9 per cent profit downgrade and plans to cut costs by 5 per cent as part of a strategic review. Shares dropped 22 per cent this week to close at $4.15.

Link Administration shares dropped by more than $1 on Thursday after the company announced that superannuation changes proposed by the government from July next year could have a "material impact" on the number of funds it administers. The company said it couldn't quantify the effect the changes would have on revenue. Shares fell 17 per cent this week to $6.98.

The Australian dollar recovered from a mid-week dip against the US dollar, finishing the week up 0.1 per cent at US75.44¢ supported by an economically positive federal budget.

Stock watch

Star Entertainment Group

Macquarie has upgraded its target price for Star Entertainment Group on the belief that longer-term growth opportunities were not being appropriately reflected in the stock price. It said The Star Gold Coast would benefit from hotel developments over the course of the next decade, underpinned by expansion and ongoing developments. The company is expected to begin construction on the first of up to five towers on the site during the September quarter. All five towers could potentially host 2,200 apartments which the broker says should be considered as "capital efficient visitation drivers supporting casino earnings." Macquarie is forecasting increased revenue for Star Entertainment Group upgrading its target price for the next 12 months from $6.05 to $6.25.

What moved the market

Aluminium exports

Aluminium prices have fallen on the news that China's aluminium exports experienced record increases during April. Shipments increased 15 per cent in year on year terms to a record 1.72Mt during the first four months of the year. Chinese producers took advantage of soaring prices in the wake of US sanctions against Russian aluminium giants Rusal. China's exports brought some relief to a market reeling from sanctions as Rusal's exports fell 70 per cent from the previous month during April. Its expected that the market will continue to look to China to fill the void left in the market and CBA analysts are forecasting that China's aluminium product exports will grow to a record level this year.

British Pound

The British pound has continued its decline against the US dollar, dropping to a low near $US1.35 on the Bank of England's cautious UK macroeconomic outlook. The Bank of England left interest rates on hold at 0.5 per cent with the last rise coming in November 2017 when the rate increased from 0.25 per cent. While a rate hold had been widely expected, the May Inflation Report showed that the BoE lowered its 2018 second quarter UK GDP growth forecast to 1.4 per cent, down from 1.8 per cent. CBA analysts are saying the bank will adopt a wait and see approach to rate hikes but that positive Brexit negotiations could put the BoE in a position to rase rates as early as November.

Gold

Gold prices rose 0.7 per cent on Thursday, continuing to grow through May as the US dollar eased off 2018 highs on the back of below forecast US inflation data. The weakening US dollar makes gold a more attractive prospect for non-US investors. The metal was also supported by the US and Iran tensions as safe haven demand for precious metals increases with silver rising 1.4 per cent. Gold could come under more pressure if the US dollar continues its rally. Further escalations of tensions between Iran and the US could also support safe haven demand for the commodity. According to analysts, gold prices are currently sitting at the lower end of the range.

Energy

The energy sector finished as one of the leading sectors on the Australian market this week. Of the 9 securities that make up the S&P/ASX 200 Energy index, only Santos closed the week lower, down 0.2 per cent at $6.19. The sector was helped on by rising oil prices, which hit four year highs during this week, after the United States said it would impose sanctions on Iran over the alleged violation of the 2015 nuclear deal. Woodside Petroleum, WorleyParsons and Oil Search led the gains for the sector with the biggest gains being recorded on Thursday and Friday. The stocks could be set to rise even further in the coming months as analysts predict oil prices could climb over $100.