The gains in the mining sector came after a dam collapsed at a Vale iron ore mine in Brazil, tragically killed 60 people. After the deadly breach, Vale outlined plans for a cut to its output.
Sandfire Resources climbed 3.3 per cent to $7.13 after the copper and gold producer strengthened its 2018-19 guidance and reduced its costs guidance.
Newcrest Mining jumped 3.5 per cent to $24.34 after announcing buoyant gold and copper production figures in its quarterly report to the market.
Missing out on the general mining stocks uptick was Syrah Resources, which was down 13.4 per cent to $1.74.
Woolworths declined 1.4 per cent to $29.61, and Costa Group was down 3.3 per cent, to $5.56.
Mr Brennan said there will be likely ongoing pressure in the consumer staples sector, including food, beverages and infant formula, given a slowing Chinese economy is likely to decrease import demand from Asia.
Qantas shares dropped 5 per cent to $5.59 after rival Air New Zealand lowered its profit outlook by as much as 30 per cent as it forecast revenue growth would ease due to weaker tourism.
Air New Zealand shares dropped more than 13 per cent and were poised for their steepest daily loss in 17 years after the airline said it would lower capacity and review business plans.
Despite positive broker commentary, Credit Corp fell 6.6 per cent to $21.26 after a rally on Tuesday. The debt purchasing and collection company told the market on Tuesday its first half 2018-19 net profit after tax was up 13 per cent, with strong growth in the US.
What moved the market
The Australian dollar rose 0.6 per cent to US71.97c, away from Tuesday’s trough of US71.38c. Data showed consumer prices rose 0.5 per cent in the December quarter and 1.7 per cent for the year, to slightly top forecasts. Core inflation was much as expected at an annual 1.8 per cent, completing the third straight year under the Reserve Bank of Australia’s 2 to 3 per cent target band. The ‘Aussie’ got a helping hand from a further sharp rise in prices for iron ore.
Chinese iron ore prices were ‘limit up’ on the Dalian Commodity Exchange, while Shanghai steel prices also gained sharply amid expectations of lower output from Brazilian miner Vale after a dam burst at one of its sites, killing scores of workers and nearby residents, Reuters reported. The world’s largest iron ore miner on Tuesday vowed to take as much as 10 per cent of its ore output offline in order to decommission 10 more dams like the one that burst last week.
US-China trade talks
The US and China resumed high-level trade talks on Wednesday. Despite hopes for a deal, so far there has been little indication that Chinese officials are willing to address US demands to protect American intellectual property rights and end policies that Washington says force US companies to transfer technology to Chinese firms, Reuters reported. The US complaints, along with accusations of Chinese cyber theft of US trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive US tariffs.
Shares of Asian luxury-goods makers were mixed after European luxury goods company LVMH reported fourth-quarter sales that beat analysts’ expectations and raised its annual dividend by 20 per cent. Watch-seller Hengdeli Holdings jumped as much as 9.4 per cent in Hong Kong, and Emperor Watch & Jewellery climbed as much as 2.7 per cent, while Prada shares fell as much as 2.3 per cent, after erasing an earlier rally of 2.9 per cent.
Canaccord Genuity raised its 12-month share price target on Credit Corp to $23.03 from $21.99, whilst retaining a “buy” rating on the stock. Analyst Benn Skender justified upping the price target for the debt purchasing and consumer lending company on the basis that its first-half of 2018-19 was characterised by buoyant consumer lending activity, further upswing in the US debt purchasing operations, and a flat result for domestic debt purchasing. He said Credit Corp has one of the best balance sheets and lowest cost of funding (both debt and equity) in the sector, which bodes well for building out its market share where returns justify it. Credit Corp last closed at $21.26.