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ASX edges up ahead of big decisions

Steven Deare
·4-min read

Investors had modest gains on the Australian share market to start the week, but that may count for little once decisions on rates and the US election are known.

The S&P/ASX200 benchmark index finished higher by 23.7 points, or 0.4 per cent, to 5951.3 on Monday.

The All Ordinaries closed up 14.2 points, or 0.23 per cent, to 6147.4.

Utilities was the best sector, higher by 2.03 per cent, followed by property, which rose 1.77 per cent.

CoreLogic's national home values index rose 0.4 per cent in October, ending five months of declines.

ThinkMarkets analyst Carl Capolingua said investors looked to be chasing stock that could deliver high yield.

"From speaking with clients, I know yield is a key consideration at the moment," he said.

"Cash and term deposit returns are causing you to lose money once you factor in inflation."

He noted many companies in the utilities sector maintained or increased dividends in the last six months, such as AGL, APA Group, Ausnet Services and Spark.

Mr Capolingua believed investors were positioning ahead of the Reserve Bank's expected rate cut to 0.1 per cent on Tuesday.

However, it was not the lower rates investors were concerned about, but the prospect of more quantitative easing.

Mr Capolingua said if the RBA decided to buy longer-dated bonds to push down yields, the dividends on some stocks would look attractive to investors.

US election results are due Wednesday.

Montgomery Investment Management's Roger Montgomery said the media coverage of the results would dwarf that of the RBA decision.

He said while the former was important to short term sharemarket moves, the latter was more important to Australian business.

"There is the view the RBA and government need to do more to stimulate the economy, and that cutting rates is essential," he said.

"When you look at the rising number of companies going into administration, that tells you more needs to be done."

Meanwhile, Australia's manufacturing sector had a marked improvement despite carrying the deadweight of Victoria's coronavirus lockdown.

The Australian Industry Group's manufacturing index increased by 9.6 points to 56.3 in October.

It is the first time since July the index has been above 50 points, indicating the sector is expanding.

Westpac had a 62 per cent dive in full-year cash earnings, largely from the effects of COVID-19 and its $1.3 billion penalty for breaching money laundering and terror financing laws.

The bank reported cash earnings of $2.6 billion for the 12 months to September 30.

The final dividend was 31 cents per share, fully franked. This was the maximum allowed by the regulator.

Shares were down 0.61 per cent to $17.80.

Among other banks, ANZ gained 2.39 per cent to $19.26, the Commonwealth lost 0.22 per cent to $68.87 and NAB increased 1.18 per cent to $18.82.

AMP continued momentum from last week's news of acquisition talks with US investment group Ares Management Corporation.

Ares has since said it is offering $1.85 per share.

AMP shares ended up 9.8 per cent to $1.68 per share.

Building products supplier CSR gained 5.67 per cent to $4.66 after declaring a special dividend with its half-year report.

In mining, BHP gained 0.09 per cent to $33.81, Rio Tinto crept up 0.08 per cent to $92.50 and Fortescue slipped 0.92 per cent to $17.21.

The Aussie dollar was buying 70.06 US cents at 1719 AEDT, lower from 70.33 US cents at the close of trade on Friday.

ON THE ASX

* The S&P/ASX200 benchmark index finished higher by 23.7 points, or 0.4 per cent, to 5951.3 on Monday.

* The All Ordinaries closed up 14.2 points, or 0.23 per cent, to 6147.4.

* At 1719 AEDT, the SPI200 futures index was higher by six points, or 0.1 per cent, to 5941.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 70.06 US cents, from 70.23 US cents on Friday

* 73.39 Japanese yen, from 73.18 yen

* 60.21 Euro cents, from 60.11 cents

* 54.32 British pence, from 54.41 pence

* 106.14 NZ cents, from 106.20 cents.