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The ASX joined a regional sell-off as US futures deteriorated, the dollar hit a three-year high and tech stocks declined for a third session.

The S&P/ASX 200 slumped to its lowest level in almost three weeks, losing 61 points or 0.9 per cent.

What moved the market

A mid-session surge in the dollar appeared to encourage overseas investors to lock in profits from favourable currency movements. (A strong dollar is also broadly negative for Australia’s export-driven economy.) The Aussie jumped as high as 79.45 cents before trimming its gain to 0.07 per cent at 79.13 US cents.

“Extensive gains in commodity prices appears to be ruling in favour of commodity-linked currencies like the Australian dollar, which climbed to its three-year high,” Kalkine Group CEO Kunal Sawhney said. “Of late, copper prices breached the USD 9,000 mark for the first time since 2011, while crude oil prices jumped closer to USD 63 a barrel.

“The growing prospects of economic growth recovery amid a worldwide Covid-19 vaccination drive seems to be giving a leg up to the demand for commodities, shooting their prices higher. Furthermore, the Australian dollar appears to be gaining momentum on the back of burgeoning demand for its key export mineral, iron ore, in China.”

The market opened underwater following a volatile night on Wall Street, then extended its losses in two down-legs. The first came as the dollar broke previous resistance, soaring to its highest point since February 2018. The second followed after lunch as Asian markets extended losses.

By the ASX close, the Asia Dow was down 1.6 per cent. Hong Kong’s Hang Seng index led the retreat, skidding 1.92 per cent after the government raised stamp duty on trading. China’s Shanghai Composite shed 1.55 per cent and Japan’s Nikkei 0.95 per cent.

US futures reversed a tentative morning rally. S&P futures were lately down four points or 0.1 per cent. A turbulent night session saw the US benchmark drop as much as 1.8 per cent before reversing to a final gain of 0.13 per cent.  

The Australian tech sector skidded to a six-week low as rising borrowing costs continued to pressure companies that depend on cheap debt to fund growth. Afterpay fell 3 per cent. Fellow BNPL player Humm tanked 18.2 per cent after withholding its interim dividend to fund international expansion. Appen dived 12.1 per cent on an earnings miss.

Winners’ circle

Woolworths rose 1.1 per cent after reporting an 8 per cent increase in food sales over the first seven weeks of this year. The supermarket anticipated sales will fade until June, but the drop would be partly offset by a decline in Covid-related costs. Rival Coles gained 0.5 per cent.

Gains were muted at the top end of the market. Transurban added 0.3 per cent. NAB was the best of the banks, rising 0.2 per cent. CBA slid 0.6 per cent, ANZ 0.7 per cent and Westpac 0.5 per cent.

A recovery in ad markets helped Nine Entertainment lift half-year net profit 69 per cent to $178 million. Highlights included a $23 million improvement in earnings at Stan and 26 per cent growth in digital subscriptions and licensing revenue. Shares jumped 9.7 per cent.

A “cautiously optimistic” outlook helped Sydney Airport rally 2.5 per cent despite a predictably grim full-year result. A 74.7 per cent plunge in traffic last year dragged the airport to a post-tax loss of $107.5 million.

CEO Geoff Culbert said, “We are cautiously optimistic that 2021 will see the industry begin to recover.”

WiseTech climbed 1 per cent after raising its earnings guidance to reflect a strong first half. The software firm expects revenue growth of 9 – 19 per cent.

Record international sales helped Blackmores increase revenue by 4 per cent despite a downturn in its Australian business. While the company’s ANZ business declined 10 per cent in the first half, international earnings jumped 61 per cent. The share price responded with a surge of 6.3 per cent.

IDP Education was the index’s second best performer after Nine, flying up 7.2 per cent. The student placement service flagged a recovery this year after reporting a 29 per cent downturn in half-year revenue. Platinum Asset Management put on 6.4 per cent 

Doghouse

Mining giants BHP and Rio Tinto eased from yesterday’s record closes following a downtick in iron ore. BHP dropped 3.1 per cent and Rio 2.7 per cent. Fortescue Metals shed 1.5 per cent. Gold miner Newcrest fell 0.6 per cent.

Elsewhere at the top end, Goodman Group sank 2 per cent, Woodside 1.1 per cent, Wesfarmers 1.1 per cent and Macquarie 1 per cent.

A tough week for investors in tech darling Appen continued as the data company missed its full-year guidance. An 8 per cent rise in underlying pre-tax earnings to $101.8 million fell short of the $106 – $109 million range flagged in December. Shares dived 12.1 per cent to their weakest level since March.

Scentre Group fell 1.1 per cent despite riding out the pandemic with a $763.4 million full-year operating profit. The Westfield operator said cashflow improved by 95.7 per cent in the second half.

Medibank dipped 3.5 per cent as the departure of CEO Craig Drummond took some of the shine off a 26.8 per cent lift in half-year net profit. Drummond has helmed the health insurer since 2016.

Telstra fell 3.1 per cent and AGL Energy 4.5 per cent as they traded without their dividends.

Other markets

Oil reversed skinny overnight gains. Brent crude retreated 31 cents or 0.5 per cent to $US64.17 a barrel.

Gold edged up $2.80 or almost 0.2 per cent to $US1,808.70 an ounce.

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