the asx 200 fails to top 6000 as banks end lower 1197822015

The Australian share market again stumbled just short of the 6,000 level of the S&P/ASX 200, ending lower after a session full of see-saw movements. During the day, the index touched a high of 5,995.0 and a low of 5,951.5 as investors vacillated at a key resistance level in the face of high valuations, and digested Governor Glenn Stevens’ remarks that the RBA may consider another interest rate cut, even though interest rates may not really be holding back the economy. In the end, the banks were the chief cause of the market’s failure to take out 6,000.

“Stocks are getting to record high areas, and the top 20 ASX stocks are already at record highs,” said Macquarie Private Wealth investment adviser John Milroy. “No doubt, on a price-earnings ratio basis, many stocks are up there. The average (price-to-earnings ratio) is around 14 times, and right now some stocks are trading in the twenties.”

Indices and sectors

The benchmark S&P/ASX 200 on Monday fell 19.4 points, or 0.3 per cent, and closed at 5,956.1, while the broader All Ordinaries index was down 15.3 points, or 0.3 per cent, at 5,921.

The gaining sectors were only materials (+0.71 per cent) and energy (+0.11 per cent). The biggest losers were information technology (-0.95 per cent), healthcare (-0.76 per cent), real estate investment trusts (-0.67 per cent), utilities (-0.66 per cent) and consumer staples (-0.66 per cent).

Stocks

In telecommunications, Telstra Corporation Ltd (ASX:TLS) slipped 0.31 per cent to AU$6.35, while iiNet Limited (ASX:IIN) was down 1.12 per cent to AU$8.85. iiNet’s proposed deal with TPG Telecom Ltd (ASX:TPM), already facing resistance from certain shareholders, received a fresh setback when iiNet founder Michael Malone said shareholders should reject TPG’s takeover bid, and that the iiNet board should step down, said ABC. "I believe this deal counters everything that you've said, Michael Smith," Mr Malone said to the iiNet Chairman on a conference call the company had with analysts and investors. "It's incomplete, unprofessional, and reflects poor diligence. It's been 10 days since the deal was announced and you now think it's time to talk to shareholders."

In breaking news, TPG Telecom boosted its guidance for the current financial year after seeing a surge in profits during the six months ended December. The Internet provider expects EBITDA to come in between AU$480 million and AU$483 million, up from its previous guidance of between AU$455 million and AU$460 million. The company reported an 18 per cent jump in net profit for the first half to AU$106.7 million, up from AU$90.1 million in the prior corresponding period, according to The Sydney Morning Herald.

Retailers stocks were mostly in the red except for Myer Holdings Ltd (ASX:MYR) which gained 0.37 per cent to AU$1.35, and Pacific Brands Limited (ASX:PBG), which surged 2.27 per cent to AU$0.450. Premier Investments Limited (ASX:PMV) jumped 11.07 per cent to AU$12.54, an all-time high, after it declared a special dividend and a 9 per cent jump in half year profit to AU$56.8 million, according to ABC.

With the exception of BHP Billiton Limited (ASX:BHP), which was up 1.08 per cent to AU$31.00, other major miners ended in negative territory. Rio Tinto Limited (ASX:RIO) was down 0.65 per cent to AU$58.21, Fortescue Metals Group Limited (ASX:FMG) fell 1 per cent to AU$1.98 and Atlas Iron Limited (ASX:AGO) was unchanged at AU$0.140. However, Mount Gibson Iron Limited (ASX:MGX) shot up 4.65 per cent to AU$0.225. According to The Australian, Fortescue may explore the sale of a minority stake in some or all of its Pilbara iron ore mines in a move to cut down debt. The paper said this morning that the price of iron ore has again sunk below US$55 per tonne to a fresh six-year low. Benchmark iron ore for spot delivery at Tianjin port, China, last traded at US$54.20 per tonne, falling 1.5 per cent from the previous close.

Energy stocks fared mixed. Woodside Petroleum Limited (ASX:WPL) was down 0.48 per cent AU$35.53 and Santos Ltd (ASX:STO) fell 0.41 per cent to AU$7.29. However, Origin Energy Ltd (ASX:ORG) gained 0.52 per cent to AU$11.65 and Oil Search Limited (ASX:OSH) Ltd shot up 1.31 per cent to AU$7.72.

Commonwealth Bank of Australia (ASX:CBA) fell 0.87 per cent to AU$95.48, National Australia Bank Ltd. (ASX:NAB) was down 0.53 per cent to AU$39.18 and Westpac Banking Corp (ASX:WBC) lost 0.43 per cent to AU$39.56. Australia and New Zealand Banking Group (ASX:ANZ) headed the other way, gaining 0.03 per cent to AU$36.80.

Economic news, currency and insight

The Australian Securities and Investments Commission (ASIC) has asked for more powers in its drive towards improving the integrity and quality of financial advice. ASIC chairman said the commission needed more powers to intervene early when it had concerns about either the structure of a financial product or its marketing, according to The Sydney Morning Herald. It has accordingly demanded increased powers by way of product intervention, the right to deny financial licences and to prosecute managers on their first supervisory failures.

The inaugural SAS-NATSEM household budget report showed that Australians are seeing a better standard of living for the first time in two years, despite headwinds such as poor wages growth. The report said that the cost of living for Australians increased by just 1.4 per cent in 2014, while income growth was up 2.7 per cent. Of course, a key factor has been lower petrol and energy prices, said the Herald Sun.

The Australian dollar has seen sustained and rare strength and has hit a new four-week high in the wake of a fresh slide Monday in the US dollar, which has yet to recover from the dovish outcome of the Fed meeting last week. In overnight trade, the Aussie hit 79.00 US cents for the first time since February 26, and at 07:00 it was trading at 78.94 US cents, up from 78.10 US cents yesterday.

The Australian stock market is likely to open flat today given that the June ASX SPI200 Index (AP) Futures was down 2 points at 5,955.0 at 06:59 this morning (AEDT).