ASX closes above 6800 for the first time since July

The S&P/ASX 200 has gathered steam in the final minutes and has broken through the 6800 level for the second time since late July, when the index reached an all-time session high of 6875.5 and closed at 6845. 

Today's gains are being driven by the Reserve Bank's dovish tone, which has market watchers expecting interest rates to fall to 0.25 per cent by the end of next year. This drives investors to seek better returns from equities, hence yield favourite stocks like Wesfarmers, Coles, Woolworths, and Cochlear are reaching all-time highs. 

Telstra is up 1.3 per cent to $3.60, Transurban is up 1.2 per cent to $15.32, and CSL is up 0.6 per cent to $273.57. 

Meanwhile the tech sector remains in red, down 1.4 per cent compared to a market rise of 0.6 per cent. This is due to a 7.9 per cent fall in WiseTech, a 3.2 per cent drop in Afterpay Touch, a 4.4 per cent drop in Technology One, and 3 per cent fall in Bravura Solutions. Within the tech sector only three companies are higher today - IRESS, Computershare, and Xero. 

A bit of late night tweeting out of DC, where these were posted at about 10pm and 10.45pm local time. 

Market analyst at Bell Potter, Jessica Amir, says the Reserve Bank minutes contained new language and showed the board was close to cutting at the November meeting ''however they noted that interest rate cuts are not having the effect that they would like''. 

Ms Amir said the RBA had a more dovish tone that usual, suggesting rates are going to be cut further. 

"Growth was expected to pick up for the economy and they drove home that they need wage growth to really drive up inflation,'' she said. 

The official cash rate is expected to drop to 0.5 per cent early next year and to 0.25 per cent by the end of the year. This is driving up share prices of blue chip stocks that can deliver a better return than bank deposits, she added. 

Shares in Kogan.com reached an all-time high of $7.92 this morning, but have since dropped 6.6 per cent down to a three-session low of $7.09.  

The stock started dropping from 10.45am and has been falling since then while the rest of the market has enjoyed a post-RBA minutes boost.  The sell-off comes as the company revealed gross sales increased 18.5 per cent compared to last October, and gross profit was up 22.9 per cent. These numbers take into account Kogan’s entire operations, which include its mobile, internet, insurance, credit cards and home loan businesses, among others.

Analyst reports have been largely positive, suggesting the sell-off is due to profit taking at the historical high. 

Much-loved Australian stores Best & Less and Harris Scarfe have been returned to local ownership with Australian private equity giant Allegro Funds purchasing the retailers from South African-owned retail conglomerate Greenlit Brands.

Greenlit has divested its entire general merchandise division, which includes discount retailer Best & Less, homewares and manchester store Harris Scarfe, and plus-size clothing chain Postie.

It's also parted with the franchise and brand agreements for UK department store Debenhams, which is slated to close its only Australian store next year. The terms of the sale were not disclosed.

The four brands have a footprint of 322 stores with over 6,100 employees, and the sale paves the way for Greenlit to focus more on its household goods division, which includes Freedom, Fantastic Furniture and Snooze.

Allegro, which has current investments including Pizza Hut and ice-cream seller Everest, said it was looking forward to helping "transform" the much-loved Australian brands. The deal is expected to be completed by early December.

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The Reserve Bank's board minutes have turned around the market with the ASX rising 0.6 per cent from a low of 6755 up to 6796 since the minutes were released. The real estate sector is up and materials are higher. The S&P/ASX 200 is how 0.4 per cent higher than yesterday's close and on track to push through 6800 again. The only sector in red currently is information technology, down 1.6 per cent due to falls in WiseTech, Technology One, and Afterpay Touch. 

a2 milk is still adding the most points, up 10.3 per cent at $13.26, Woolworths is now 1.6 per cent higher at $39.50, an all-time high price.  And Telstra has started rising, up from $3.52 at the open to $3.60. 

David Scutt reports that a 25 basis point rate cut from the RBA by May next year is once again deemed a certainty, according to implied pricing from Australian interbank futures markets. Near-term, a rate cut next month is deemed to be a one-in-three prospect. By February next year, those odds increase to 86 per cent, up from around 70 per cent this time yesterday.

Qantas shares are trading up 1.7 per cent today to new all-time highs of $7.10 after the company set bold new targets for improving earnings margins in its core airline units.

At an investor day in Sydney on Tuesday, Qantas set a 2024 target for to the EBIT (earnings before interest and tax) margin of its domestic business to about 18 per cent, from 12 per cent last year. Budget arm Jetstar’s earnings margin would rise from 9.3 per cent today to about 22 per cent over the next five years.  Qantas boss Alan Joyce said that would be achieved through efficiency measures - such as digitisation, changes to its fleet and network, and cost cutting - which will deliver $400 million in annual benefits.

“We are working quite extensively on our transformation program and in the year ahead there will be a lot more focus on cost, and in the next five years we think there is a path to achieve significant improvement in margins,” Mr Joyce said.

“We look around the world and we see that full-service airlines are getting to margins in the high teens so we’ll continue to target that for Qantas domestic and low cost carriers get to margins in the low 20s.”

Much of today’s presentation is focused on how Qantas and Jetstar can tap into growth opportunities in Asia.

“We are seeing some volatility obviously in the short term - we’re seeing slower economic activity because of the trade wars both internationally and domestically,” Mr Joyce said.

“But we are still seeing very significant growth in this region, [just] not as big as we were expecting a few years ago.”

Matthew Bickford-Smith has been pushed out as chair of printing firm Ovato (formerly PMP) and has been replaced by Michael Hannan, a major shareholder and father of the chief operating officer James Hannan. Non-executive directory Terry Sinclair has also resigned. 

The resignations follow ''discussions with the majority shareholder'', although according to the latest substantial shareholder notice, the biggest shareholder is Mr Hannan himself with the Hannan family owning a 50.9 per cent stake. 

Mr Hannan was the executive chair of IPMG, which merged with PMP in 2017 to form Ovato. The two companies are the largest heatset web offset printers in Australia and tried to merge in 2001 but were blocked by the competition watchdog. The deal was approved in 2017 as the magazine industry shrank.  

"These resignations and my appointment come about at an important juncture for the Company as we complete the NSW site consolidation and market the final phase of the integration following the merger of IPMG and PMP in early 2017,'' Mr Hannan told shareholders this morning. 

He also thanked Mr Bickford-Smith, former chair of PMP, and Mr Sinclair for their impact on the company. Mr Bickford-Smith was also a director of Eastern Australia Agriculture from 2008 to 2018, during which time it controversially sold about 29,000 megalitres of overland water flows to the federal government for $79 million.

Ovato shares are unchanged at 4.9¢ today, down from 20¢ a year ago. The company conducted a capital raising in May that had a significant retail shortfall that saw the Hannan family acting as sub-underwriters and picking up nearly 54 million shares