ASX rises 0.5%, edging closer to record as miners rally

ASX hits 13 month high, unemployment falls again, oil prices jump 5% 

The ASX200 (ASX:XJO) is within just 100 points of an all-time, finishing 0.5% higher today and slowly catching up to a US market that is hitting new highs almost every other day.

Today, it was all about the mining and energy sector, with US crude inventories running low, sending the oil price up 5%.

Signs of a recovering economy also supported both Fortescue (ASX:FMG) and CSR (ASX:CSR) which finished 3.5% higher respectively.

Boral (ASX:BLD) finished just 0.5% despite flagging further corporate activity, with management assessing the option to divest their fly ash business as the coal stations it relies upon begin to shut down.

In economic news, the remarkable Australian recovery story continues, unemployment falling from 5.8% to 5.6% in March, with another 71,000 jobs added. Most importantly, hours worked rose to a record 1,800 million, up 2.2%, along with the participation rate which reached 66.3%.

All signs point to a strengthening of the consumer-led recovery. Qantas (ASX:QAN) is one company likely to benefit, with management revising its estimate and now expecting domestic flights to move beyond 90% capacity in the final quarter of the financial year; shares fell 0.2% despite the positive news.

More on the Z1P deal, Ampol sales spike, Bank of Queensland dividend returns 

Zip Co (ASX:Z1P) confirmed the terms of their convertible note deal, with $400 million set to be raised with a conversion price of $12.39 per share to ensure it isn’t dilutive to investors.

Ampol’s (ASX:ALD) renaissance under the new name continues, the share price jumped 5.4% after management announced that their convenience retail network had seen like-for-like sales growth of 10%.

Jet fuel sales remain 53% lower than this time last year but in a positive sign, the refining business at Lytton is running at breakeven despite the still weaker oil price and demand.

Bank of Queensland (ASX:BOQ) shares fell 0.8% despite reinstating their dividend at 17 cents per share after ‘deferring’ it last year.

The company is recovering strongly with a resurgent Queensland economy and lower bad debt expectations resulting in a 66% increase in net profit for the half.

The company remains less well capitalised than the majors, with tier one capital of 10.03% and a weaker net interest margin of 1.95% reflecting their highest cost of capital.

Records all around, Taiwan Semi, Citigroup reports, consumer sales running 

Both US and European markets reached records overnight, powered by signs that stimulus cheques are feeding into the real economy and suggesting the recovery may still have legs.

The Dow Jones finished 0.9% higher, the S&P500 1.1%, and the Nasdaq 1.3%, with the healthcare, technology, and real estate sectors the strongest.

It appears the US$1,400 stimulus cheques didn’t stay in savings accounts for long, with retail sales jumping 9.8% in March, a record beaten only by the growth last May.

Bars and restaurants were the standouts with sales jumping 13.4% and clothing 18.0% for the month alone.

Speaking with a number of managers this week, the strength of this consumer recovery is not yet fully appreciated by the market, representing 70% of the economy there may well be some surprises to come.

World beating Taiwan Semiconductor Manufacturing Co (TPE:2230) jumped 1.1% after reporting a 19% increase in first-quarter profit.

A key holding in the Platinum and Munro strategies, the company has benefitted from a huge boost in the demand for high power processing chips.

The profit was supported by a 17% revenue increase, as gaming console and electronic demand led to a shortage; North American revenue continues to take up 2/3rds of the company’s sales.

The Inside Investor