Costa Group was by far the worst performer over the week, however, with the fruit grower dropping 34.7 per cent to $4.64 after telling investors to expect “largely flat growth” in net profit after tax for the 12 months ended June 2019 after sales of tomatoes, berries and avocados for December and January came in lower than expected.

Broadly, investors breathed a sigh of relief after US Federal Reserve chairman Jerome Powell said the central bank can be patient with respect to future interest rate increases, and trade talks between the US and China resumed for the first time this year.

Topping the list of weekly advancers was heavy earthmoving equipment renter Emeco Holdings, which jumped 19.3 per cent to $2.26.

Other mining equipment firms also advanced during with week, with Seven Group Holdings climbing 13 per cent to $15.43 while Ausdrill rose 15 per cent to $1.23 and WorleyParsons climbed 15.6 per cent to $13.39.

How the market moved over the past five days. 

Magellan Financial Group jumped 15 per cent to $26.48 after telling shareholders that it expected to unlock more than $40 million in performance fees in the second half of 2018.

Platinum Asset Management, however, said it’s not counting on any performance fees and posted a weekly loss of 3.1 per cent to $4.62.

The gold mining sector that benefited from investor risk aversion during the last quarter lost ground. Regis dropped 3.7 per cent to $4.73 while Northern Star Resources fell 3.6 per cent to $9.36.

What moved the market:

 

Stock watch: Treasury Wine Estates

Macquarie maintained its “outperform” rating for Treasury Wine Estates, as US wine competitor Constellation Brands signalled weakness in its wine and spirits business next quarter. Macquarie analysts said they were less concerned with the impact of Constellation’s result on Treasury because inexpensive wines appeared to be struggling more than Treasury’s core market of higher priced bottles, and depletions for Constellation appeared weaker than for Treasury. Constellation said virtually all growth was being driven by products with a price point above $US11. Analysts viewed this as positive for Treasury, given the company has a focus on premium products and has been “aggressively exiting lower-margin commercial volumes over the last couple of years”. The stock closed at $14.86 on Friday.

Zinc sinks

Zinc prices fell on the understanding that Chinese zinc smelters will boost refined zinc supply this year, according to Commonwealth Bank analyst Vivek Dhar. He also finds that treatment charges for Chinese zincore ‑ which are paid to smelters ‑ have increased to the highest level since 2016 because of rising zinc mine supply. The metal is used to galvanise steel. Three-month forward zinc contracts traded on the London Metals Exchange are down 27 per cent over the past 12 months, to $US2,461 a tonne on Thursday.

Wild week

The Australian dollar is on track to finish the week as the second-best Group of 10 currency in the world against the US dollar, advancing 1.3 per cent. That puts it behind only the Norwegian Krone’s 1.8 per cent jump. Further back-pedalling from the US Federal Reserve on interest rate expectations and a US trade delegation’s visit to Beijing helped set a more optimistic tone for the Australian dollar after touching a 10-year low the previous week. Westpac expects further Fed tightening and a steady RBA cash rate should see the Australian dollar finding support on dips towards US70¢ and finishing the first-quarter around US71¢.

Slow month

The Australian Industry Group Australian Performance of Construction Index fell to a 5-and-a-half year low of 42.6 points in December, down 1.9 points from November. Construction activity has contracted for four successive months, CommSec finds. A reading above 50 points indicates construction activity is generally expanding; below 50, activity is seen to be declining. “The pipeline of outstanding construction work remains large, but has peaked with property developers under increasing pressure. Reduced supply could potentially rebalance the Sydney and Melbourne residential property markets more quickly,” senior economist Ryan Felsman said.

Big four

ANZ Banking Group is Goldman Sachs’s preferred bank stock based on the broker’s view that it is the best positioned of the major banks in a slowing revenue environment helped by its cost outlook, which is the most favourable. Goldman also upgraded its recommendation on National Australia Bank to “buy”. It forecasts 6.5 per cent earnings per share growth for the major banks in 2018-19, and a 7 per cent dividend yield. Among the main themes it identifies, slowing housing remains a “volume not an asset quality risk” despite Goldman’s expectations of further house price declines in 2019.

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