The Australian sharemarket has closed the week higher, hitting a fresh 10-year high on the back of improved market sentiment and commodity prices.

The S&P/ASX 200 index rose 14.3 points, or 0.2 per cent, this week to 6300.2, beating the previous 10-year high by 14 points. 

Improving trade relations supported base metal prices this week as they recovered from almost two months worth of losses.

The Bloomberg Commodity Index rose 2 per cent this week, its best weekly performance since October 2017. BHP Billiton lifted 4.5 per cent to $34.40 this week. The company announced the sale of its US shale assets for $US10.5 billion. Rio Tinto shares also rose 1.6 per cent to $81.38, while South32 shares closed the week 2.5 per cent higher at $3.63.

Newcrest Mining shares also rose this week after the company announced record gold production at its Lihir project in Papua New Guinea. Its shares rose 5.9 per cent to $21.28.

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Lynas Corp shares surged 15.4 per cent to $2.33. A UBS note gave the company a $3.30 price target and said it had the best global Rare Earth deposit in its view. 

Domain and Fairfax Media shares both rose on the back of the announced merger that would see Fairfax and Nine Entertainment form a new company called Nine. Fairfax shares closed the week flat at 80.5¢, while Domain shares were 8.1 per cent higher at $3.35. Nine Entertainment shareholders were not as optimistic on the deal. Its shares fell 13.1 per cent to $2.19.

AMP announced on Friday that the cost of its governance scandal would hit about $500 million over the next few years. It said that was putting aside $290 million to compensate customers who received poor or no advice, going back 10 years. It also flagged a fall in first-half underlying profits worth up to $63 million. Its shares fell 9.1 per cent to $3.30 this week. 

Dry weather forced Nufarm to cut its earnings forecasts to between $255 million and $270 million, down from the $317.4 million it was forecasting in May. The company said that farmers had been spending less on herbicides due to the poor winter crop. Nufarm shares fell 13.6 per cent to $7.27 this week.

Stock watch

Macquarie Group

Morgan Stanley reiterated its positive view on Macquarie despite the share price falling in the wake of CEO Nicholas Moore’s retirement. The broker said that while the timing was hard to predict, the move was not surprising. They added that his successor, Shemara Wikramanayake was a logical replacement given her track record. The broker is forecasting Macquarie to beet profit expectations for the first half of 2019 and only needs a growth of 5 per cent year on year for the second quarter of 2019 to hit forecasts. The broker is expecting more than the market, with its growth expectations 4 percentage points ahead of consensus. Morgan Stanley has retained their $130 price target for the company, forecasting that the bank will continue to pay strong dividends per share, rising to $6.54 a share in 2021 from $5.25 a share in 2018. 

What moved the market

Facebook

Facebook shares took a big hit on the US markets on Thursday, falling almost 20 per cent and wiping billions from the company’s worth. The loss came following the company announcing its sales and user growth, which disappointed investors as the stock wiped all of its gains this year in just one day. The share plunge meant that Facebook lose $US124 billion in market capitalisation, the biggest ever loss of value in one day for a US traded company. In fact, its loss was nearly four times the entire market capitalisation of Twitter. Founder and chief executive officer Mark Zuckerburg’s net wealth also took a hit, falling almost $US16 billion and dropping him to sixth on the Bloomberg Billionaires Index.

Gold

Precious metal prices have slipped on the strengthening relationship between the United States and European Union as safe haven demand softens. The US announced that it would not impose new tariffs on automotive imports from the European Union and both sides remain in talks as they work towards lowering current tariffs as well. Gold fell by 0.7 per cent to $US1,222.64 an ounce on Thursday while silver fell by 1.5 per cent to $US15.38 an ounce. Pressure from a stronger US dollar has been pushing the price of gold lower. It is currently sitting about 10 per cent below its April high and is currently trading at its lowest price in more than 12 months. 

Euro

The price of the euro fell on an uneventful European Central Bank policy meeting as the bank’s president Mario Draghi reiterated the bank’s policy of “patience” when it came to an interest rate rise. Some investors had been hoping the bank would give details about the timing of its next rate rise but the bank is remaining coy. Analysts are expecting interest rates to remain on hold until September 2019 as the euro lifts against the US dollar. “We still think that a sustained rally in the euro against the dollar is on the cards next year,” said Capital Economics market economist Oliver Jones. “Our projections are for rates to rise a bit faster than investors are anticipating after the first hike.” 

Oil supplies

Supply threats in the Middle East have lifted oil prices this week. The price of Brent crude rose 2 per cent this week, its best weekly performance in four weeks. Saudi Arabia’s Energy Minister Khalid al-Falih said the world’s top exporter was “temporarily halting” all oil shipments through the Bab El-Mandeb Strait following terrorist attacks by the Iran-aligned Houthi rebels. Head of Trading APAC at OANDA, Stephen Innes said the price should continue to lift. “The disruption along this vital oil shipping lane has triggered a short-term bullish bid in Brent Oil,” he said. With positive news on the EU-US trade front, oil markets should hold their bid.”

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