Australian shares extended their current losing streak to three sessions on Thursday, as investors contrasted a raft of company updates with sharp Wall St gains that were made amid optimism over corporate earnings trends.
The S&P/ASX 200 index fell 1 point to 6014, while the All Ordinaries index declined 3 points to 6130. The Australian dollar traded at US79.63?? following strong jobs data for December that nonetheless did little to change interest rate expectations.
That data showed that the Australian unemployment rate reached 5.5 per cent in December, a touch higher than the 5.4 per cent economists had been expecting, while the number of jobs added to the economy soared to 34,700.
The sharemarket was similarly largely unmoved by the standout employment data, drifting lower through the session from early gains inspired by a fresh record highs on Wall Street in a session that saw the Dow close over 26,000 for the first time, just days after it hit the 25,000 level.
US investors are optimistic for company earnings against a backdrop of a strengthening US and global economy. The Australian market should also see further upside in stock prices, supported by rising earnings, Credit Suisse equity strategists said.
Current bottom-up expectations are for 10 per cent EPS growth for fiscal 2018 and a further 4 per cent for fiscal 2019, they noted.
During Thursday's session, miners extended losses from the previous day with GDP data from China set to be released after the close of trading.
Newcrest Mining declined 1.5 per cent to $23.01 and Whitehaven Coal fell 6.2 per cent to $4.40 after reducing its full-year saleable coal output guidance.
BHP managed to eke out a 0.1 per cent advance to $30.78 after it cut its coking coal export target for fiscal 2018 and revealed its financial results in February would include exceptional items.
Woodside shares fell 0.8 per cent to $33.40 after strengthening oil prices failed to offset the impact of weaker production for in the December quarter and as analysts weighed the firm's output guidance.
South32 dropped 2.6 per cent to $3.82 a day after reporting its production numbers and Credit Suisse downgraded the iron ore producer to underperform.
Embattled department store retailer Myer fell 1.5 per cent to 64?? after it appointed a new chief operating officer and chief financial officer and said it was stepping up cost cutting after posting an unprecedented fall in sales before Christmas.
Stockwatch - Treasury Wine Estates
The wine producer outperformed the broader market, with a 0.9 per cent advance to $15.10, for a third straight day of gains. Morgan Stanley analysts lifted their estimates for the company on a lower US corporate tax rate and surging demand from Asia, which they believe will offset a softer US performance. Treasury Wine should re-rate they said as the market looks to 2019, which they believe will be a "vintage year". The company's valuation looks attractive relative both to the growth outlook and to its global peers, the broker concluded. They're overweight Treasury Wines while holding a cautious view on the industry as a whole.
Volatility
Credit Suisse's equity team said that the current bull market is notable for its lack of volatility. "While there is reason to believe a gain in Aussie equities in 2018 will also bring with it a tick-up in volatility, we think there are clear structural dampeners of volatility for now," the strategists said, adding that they think a world of low volatility should support higher market valuations. "Within the Australian market, the compression in volatility dispersion between stocks should lead investors to tilt portfolios towards those stocks with high volatility," the strategists added.
Central banks
The Bank of Korea left its key interest rate unchanged on Thursday as inflation remained below target and the nation's currency trades near a multi-year high. The unanimous decision to keep the seven-day repurchase rate at 1.5 per cent, is the next-to-last rate decision before Governor Lee Ju-yeol's term ends in March. At the Bank of Canada, a recent run of strong economic data was too hard to ignore and the central bank raised its key rate by a quarter-point to 1.25 per cent, the highest level since 2009, also as widely expected.
Chinese home prices
China's housing market picked up slightly in December as mild declines in bigger metropolises stabilised and smaller cities gained some momentum, but price growth more than halved in 2017 as government curbs on speculation took effect. New home prices rose 5.3 per cent year-on-year in December, slightly up from November's 5.1 per cent increase, but well off the 12.4 per cent growth seen in 2016 as the government worked to engineer a soft landing for the soaring housing market.
Asian stocks
Asian stocks struck record highs on Thursday, with a rally by Wall Street supporting bullish investor sentiment. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, building on the previous day's gains to make a fresh peak. South Korea's KOSPI added 0.2 percent and Japan's Nikkei was up 0.4 percent after reaching its highest level since late 1991. Shanghai rose 0.4 percent and Hong Kong's Hang Seng advanced 0.4 percent. Markets were anticipating China's gross domestic product data to show the economy grew 6.7 per cent in the fourth quarter.
