Australian shares weakened on Thursday, as investors ended a holiday-shortened week on a downbeat note, while the Australian dollar briefly vaulted back over US81??.
The S&P/ASX 200 index edged down 4 points, to 0.1 per cent, to 6050, while the All Ordinaries lost the same amount in points and percentage terms to end the session at 6164.
The Australian dollar briefly jumped over US81??in the session to trade at its highest level since May 2015 before falling back to US80.93??.
Currency strategists attributed the Australian dollar's strength to a sharp drop in the US dollar after US Treasury Secretary Steven Mnuchin endorsed the US dollar's decline as a benefit to the American economy and US Commerce Secretary Wilbur Ross said the US would fight harder to protect its exporters.
"The comments from Treasury Secretary Steven Mnuchin that he welcomes a weaker dollar, led to huge US dollar selling across the board," said Rakuten Securities Australia, COO, Nick Twidale.
"The impact was felt across the markets especially in the commodities markets, which saw huge gains against the greenback. Equities were also caught up in the turmoil," he added.
The commodity price gains provided a tailwind for the Australian mining sector on Thursday, with BHP up 0.6 per cent at $30.85, Rio Tinto trading up 0.8 per cent at $78.81 and Fortescue Metals up 1.6 per cent at $5.10.
Gold was a notable advancer and gold miners strengthening in Australian trading included Newcrest Mining, up 2.2 per cent at $23.36, and Evolution Mining, up 3.7 per cent at $2.80.
IOOF shares climbed 2.1 per cent to $10.91. Investors should prepare for an IOOF "upgrade cycle," as long as the wealth group successfully executes its $975 million acquisition from ANZ Banking Group, Morgan Stanley analysts said as they racheted up earnings estimates for the firm.
On the downside, banks pulled back after two days of gains, with NAB ending the day down 0.6 per cent at $29.06, ANZ lower by 0.5 per cent at $28.65 and Westpac down 0.3 per cent at $30.93.
Industrials, which are often viewed as bond proxies, had a weaker session as well, with Transurban falling 1.1 per cent to $12.06 and Sydney Airport losing 1.1 per cent to $6.95.
BlueScope Steel traded down 2.1 per cent to $14.79 in the session and AGL shares lost 1.6 per cent to end the day at $23.47.
- With wires
Stockwatch
Nickel miner Western Areas climbed on Thursday, with the firm's shares rising as much as 6.6 per cent to $3.40 and hitting their highest level since January 16 before closing up 4.7 per cent at $3.34. The gains for the firm followed a two-and-half-year high for the nickel price on Wednesday amid expectations that increased demand in batteries used to power electric vehicles will boost the stainless steel ingredient. Western Areas reported December quarter production numbers on Wednesday which showed the company achieved record quarterly throughput of 161,218 tonnes of ore.
New Zealand prices
New Zealand's consumer price index rose 0.1 per cent in the fourth quarter, Statistics New Zealand data revealed, with the figure falling short of economist expectations. Annual growth was at 1.6 per cent, well below the 1.9 per cent forecast by economists, who had also predicted a 0.4 per cent quarterly rise. Paul Dales, Capital Economics' chief economist for Australia and New Zealand, noted unseasonable weakness in clothing prices, household goods, car prices and phone contracts in the quarter depressed the reading.
Deals
Merger and acquisition activity in Australia hit $113 billion in a total of 580 deals in 2017, according to data compiled by Mergermarket. Total deal value recorded its second-best result since 2008, while deal volumes were the highest since the data series started in 2001. In 2017, 63 more deals were recorded compared to the previous year, while deal value rose 29.2 per cent. Australia's share of AsiaPacific deal-making activity rose to 12.1 per cent in 2017 from 9.2 per cent in 2016, Mergermarket said.
European Central Bank
The European Central Bank was scheduled to hold a policy meeting and press conference on Thursday. "With the eurozone economy continuing to grow above trend, several ECB speakers have expressed concerns about the strength of the euro in the past fortnight," said Nick Peters, portfolio manager at Fidelity International. "It will be interesting to see which side of the argument ECB governor Mario Draghi chooses at this press conference," he added. The euro was trading at $ against the dollar.
