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The Australian share market extended its recent run of gains into fifth straight session on Wednesday, 16 October 2019, on tracking gains on the Wall Street overnight and optimism over the possibility of a breakthrough in Brexit negotiations. Market gains were, however, limited after fresh International Monetary Fund report that lowered the 2019 and 2020 growth forecasts and warned of a "precarious" outlook if trade conflicts continue to fester. Around late afternoon, the benchmark S&P/ASX200 index grew 78.49 points, or 1.2%, to 6,730.50, while the broader All Ordinaries added 73.97 points, or 1.1%, to 6,837.30.
Investor risk sentiment underpinned on tracking gains on the Wall Street overnight after the big banks on the front lines of America's economy reported mostly upbeat results on Tuesday. Also, optimism over the possibility of a breakthrough in Brexit negotiations boosted sentiments. The U.K. and the European Union moved close to agreeing upon a draft plan for Britain to leave the bloc, with a preliminary Brexit deal possible by Wednesday. EU chief negotiator Michel Barnier told a meeting of government ministers earlier in Luxembourg that a deal on a draft Brexit text was needed overnight if he was to recommend on Wednesday that EU leaders sign off on an agreement when they meet later this week.
The IMF on Tuesday cut its 2019 global growth forecast, calling for the weakest pace since the financial crisis. In its World Economic Outlook, published Tuesday, the IMF sees global economic growth falling to 3% this year, the slowest pace since the 2008 financial crisis.
Shares of financials advanced, with the four majors up as much as 1.4%, with the National Bank (NAB) the standout. Commonwealth Bank (CBA) was lagging a touch as it holds its AGM. English based bank, CYBG Plc (CYB), was 7% higher on increasing hopes for a Brexit deal. Wealth manager, Challenger (CGF) rose 5.5% on a quarterly update.
Consumer staples were the other big improver. The supermarket giants Coles Group (COL) and Woolworths (WOW) were both firmed around 1%. Dairy and Infant formula company, A2 Milk (A2M) was 2.5% higher while Treasury Wine Estate (TWE) was up 4.5% as the winemaker holds its AGM.
Shares of the IT and material sectors were lower. Buy-now pay-later firms such as Afterpay Touch (APT) and ZipCo (Z1P) declined as major brokers reports initiated as a sell. APT declined 7.6% while Z1P was down 5.7%. As for the miners, Rio Tinto (RIO) was 0.2% weaker after releasing a quarterly update. Iron ore production and shipment from its Pilbara operations in WA rose on the previous year, overcoming weather impacts earlier in 2019. However aluminium and copper production fell. Gold miner Evolution fell 5%. Northern Star (NST) was 2% softer as it looks to complete a takeover of fellow gold miner Echo Resources (EAR).
CURRENCY NEWS: The Australian dollar eased against greenback on Wednesday. The Australian dollar, sensitive to shifts in broader risk appetite, changed hands at $0.6737 following a low of $0.6744 seen earlier.
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