The Australian sharemarket ended the week on a positive note despite jitters surrounding the passing of US healthcare legislation, billed as the first big test of the Trump administration's legislative prowess.
The benchmark S&P/ASX200 rose 0.8 per cent to 5753.5 on Friday, narrowing the weekly loss to just 0.8 per cent, after the market on Wednesday experienced its biggest slump since November. The broader All Ordinaries Index also fell 0.8 per cent over the five trading sessions.
Global bourses tumbled on Wednesday over fears that the Trump administration might be unable to get its healthcare reform bill through Congress. Staunch resistance within the Republican party, delaying the vote to Friday night, sparked worries Trump might struggle to get the necessary backing for his pro-growth plans such as tax cuts.
Wall Street's S&P500 fell 1.4 per cent during the week's first four trading sessions, but futures on Friday indicated it would open slightly stronger.
On the ASX, utilities had a massive week, with the sector up 1.7 per cent as investors sought defensive stocks. Spark Infrastructure and AGL Energy were the standouts, up 2.6 and 2.1 per cent respectively.
Dragging down the index were materials and telecoms. BHP Billiton fell 2.3 per cent while Rio Tinto shed 4.5 per cent over the week. Telstra shares rose 1.6 per cent on Friday but fell 3.6 per cent over the week, one of the biggest drags on the index.
The big four banks performed well on Friday, after three of them hiked mortgage rates for speculative buyers as part of a campaign by regulators to cool a hot housing market. Friday's gains didn't make up for the week's falls, with most posting big falls apart from NAB, which was flat.
Analysts expected the pullback in both the ASX and Wall Street to be temporary.
AMP head of investment strategy and chief economist Shane Oliver said the pull-back was an opportunity to "buy the dips". "We see this as an opportunity...valuations are okay, global monetary conditions remain easy and global profits are accelerating on the back of stronger global growth. So shares are likely to continue to trend higher on a 6-12 month horizon."
Principal Global Investors chief global economist Bob Baur offered another bullish assessment.
"Some worry that the surge since the US election is only a Trump rally and that stocks will tank when the expected reforms don't occur or are delayed.
"But, if that's the case, with all the problems and partisanship in Washington now, why are stocks still holding at their highs? Markets that don't go down on bad news are good markets."
Stock watch: Bellamy's Australia
Bellamy's shares soared in the wake of China easing its regulations on cross-border e-commerce late last week, and held on to their gains through the the subsequent trading sessions, ending the week up 21 per cent to $4.61. The standout performance comes despite the legal battle to control Bellamy's continuing unabated, with rebel shareholders pressuring the board for access financial documents this week. It also puts Bellamy's well above the average 12 month price expectations of analysts covering it, which is $4.13. Wilson's James Ferrier upgraded his rating to a 'hold' in the wake of the China news, but most remained unmoved. Four analysts maintain a 'hold' rating, while three have it as a 'sell'.
Market movers
LNG cartel
The world's biggest LNG buyers have joined together to secure flexible supply contracts, a move which shifts power to importers from producers like Australia as oversupply grows. Korea Gas Corp said it had signed a memorandum of understanding with Japan's JERA and China's CNOOC to exchange information and "co-operate in the joint procurement of LNG". Together, these companies purchase a third of global LNG production, giving them a strong hand to challenge restrictive contract terms. Influential buyers' clubs are largely unheard of in commodity markets where it is the producers who wield power.
Tighter lending
Financial conditions have tightened a bit in Australia due to the Aussie dollar's rise and after banks hiked mortgage rates, according to UBS. The bank uses an average of financial indicators such as lending rates, the bond curve, the exchange rate and asset prices, which it says tend to lead GDP growth by about three quarters. Australia's financial conditions index implies GDP growth well above the current 2.4 per cent annual pace, which is tipping the growth rate to pick up to 3.25 per cent this year.
Expensive flights
Domestic airfares have hit a five-year high, government data shows, as airlines draw a line under a price and capacity war. Data from the the Bureau of Infrastructure, Transport and Regional Economics shows that in March, average economy fares reached their highest levels since 2011. Business class fares were at their highest since 2011. Economy airfares were at the highest level since 2012. The department conducts a monthly survey of airline booking websites and compiles an index based on the lowest available fare on the 70 most popular routes in Australia.
Slater & Gordon
Some rare good news for Slater & Gordon investors: ASIC will take no action after the corporate watchdog completed a review of the embattled law firm's financial records. Shares shot up 13.7 per cent to 1.25c. ASIC studied records and accounts covering December 1, 2014, to September 29, 2015, for evidence of deliberate falsification or manipulation by the company whose share price crashed due to problems with the UK business it acquired in March 2015. The regulator did not find breaches of the law, Slater & Gordon said.
