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The share market slumped to a two-week low before cutting its losses by four-fifths as bargain-hunters swooped on CSL, CBA and the big three iron ore producers.
Weak leads from Wall Street helped drive the S&P/ASX 200 down more than 110 points until an afternoon revival. The index trimmed its loss to 20 points or 0.29 per cent by the close as BHP, Rio Tinto and Fortescue cut their falls and CSL forged higher.
What moved the market
Wall Street retreated as a World Health Organization warning of rising Covid rates encouraged a second night of profit-taking. The S&P 500 dropped 0.68 per cent, moving further from Friday’s 13-month high.
“It was overbought,” Quincy Krosby, chief market strategist at Prudential Financial, told CNBC. “It’s healthy to see the sell-off. Obviously you’re always worried about a deeper sell-off, but most likely it’s not.”
US futures continued south this afternoon following a disappointing update from Netflix. S&P 500 futures eased seven points or 0.17 per cent. Netflix shares slumped 8.76 per cent in after-hours trade.
Several Asian markets fell more than 2 per cent in morning trade before China led a recovery. The Shanghai Composite rose 0.12 per cent by the Australian close. The Asia Dow was off 1.38 per cent, Hong Kong’s Hang Seng 1.63 per cent and Japan’s Nikkei 1.98 per cent.
The big three iron ore producers fell victim to early selling, but led the fightback as buyers responded to a ten-year high in Chinese ore. Fortescue Metals clawed back a 3.56 per cent loss to finish flat. Rio Tinto cut a 2 per cent loss to 0.09 per cent.
BHP dropped 0.51 per cent after reporting a record quarter and reaffirming full-year production guidance for ore and petroleum. The Big Australian raised its copper guidance and cut its coal outlook, citing weather impacts.
“We are reliably executing our major projects, bringing on new supply in copper, petroleum and iron ore,” CEO Mike Henry said. “With our focus on keeping our people safe, costs down and productivity up, we are well positioned to finish the year strongly and continue delivering the essential products the world needs,” he added.
CSL climbed 1.52 per cent as traders moved into traditional defensive assets. Cleanaway Waste gained 2.82 per cent, Ansell 1.49 per cent, Cochlear 1.49 per cent and ResMed 1.17 per cent.
Retail sales rebounded last month, but turnover for the quarter flattened. March sales increased by 1.4 per cent, ahead of expectations. The Australian Bureau of Statistics said quarterly figures were relatively unchanged from the December quarter, presenting a headwind for next month’s Q3 GDP report.
Winners’ circle
Corporate Travel Management rallied 3.52 per cent on the prospect of a return to profitability. The provider of corporate travel services broke even last month and expects to turn a profit this quarter as domestic travel recovers and European/UK business picks up. Helloworld dipped 2.42 per cent despite forecasting a return to profitability in the December quarter.
Ardent Leisure surged 8.11 per cent on news of a 44 per cent increase in revenue this month and record Main Event sales volumes last month. The company also announced the appointment of Greg Yong to replace John Osborne as CEO.
While the big three ore producers wobbled, a ten-year high in ore was enough to lift newcomer to the ASX 200 Champion Iron 3.26 per cent to an all-time high.
“While iron ore prices have already been riding high on the back of improving steel profit margins in China and burgeoning demand for steel, recently emerged supply concerns have added more fuel to the fire,” Kalkine Group CEO Kunal Sawhney said. “With world’s major iron ore miners Vale and Rio Tinto’s releasing disappointing output figures for Q1 2021, the supply side story does not appear to be promising at the moment.”
Doghouse
Travel and tourism stocks copped the worst of the US selling, setting up their Australian peers for a challenging session. Qantas shed 1.4 per cent, Flight Centre 1.91 per cent and Webjet 0.19 per cent. Upbeat trading updates from Corporate Travel Management, Helloworld and theme park operator Ardent Leisure shielded the sector from heavier falls (see above).
Energy was among the worst of the sectors, falling 1.5 per cent as crude extended overnight losses. Brent crude dropped 48 cents overnight and another 46 cents or 0.69 per cent this afternoon to US$66.11 a barrel as rising Covid rates muddied demand expectations. Oil Search fell 2.05 per cent, Beach Energy 2.56 per cent and Woodside 1.46 per cent.
Santos gave up 1.14 per cent despite renewing its gas supply deal with Rio Tinto. Santos will supply the miner with up to 15 petajoules of natural gas from late this year.
Nuix dived 15.38 per cent to an all-time low after admitting it will miss revenue and contract value forecasts contained in the prospectus when the company listed in December. The analytics firm now expects revenue of $180 – $185 million, versus a $193.5 million forecast in the IPO. The company said a customer switch to consumption licences had a near-term negative impact but would prove better in the long term.
Splitit fell 5.33 per cent despite increasing merchant sales volumes by 247 per cent year over year last quarter and raising gross revenue by 292 per cent. The share price jumped earlier this month after the payments platform announced a partnership with China UnionPay.
Elsewhere in the BNPL space, Afterpay fell 2.72 per cent and Z1P Co 2.78 per cent. On the wider tech sector, Appen shed 4.52 per cent, Altium 2.57 per cent and WiseTech 3.62 per cent.
CBA led a recovery in the banks, adding 0.49 per cent. Westpac lost 1.03 per cent, ANZ 0.84 per cent and NAB 1.09 per cent.
Temple & Webster fell 10.63 per cent a day after outlining plans to invest in growth. Fund manager Challenger slumped 5.58 per cent to a five-month low after guiding to the lower end of previous forecasts. Lynas Rare Earths dropped 5.3 per cent in the wake of decline in Q1 sales revenue.
Other markets
Gold attracted haven-buying overnight and continued to edge higher this afternoon. The yellow metal advanced $6.70 or 0.38 per cent to US$1,785.10 an ounce.
The dollar eased 0.04 per cent to 77.19 US cents. The Aussie cracked 80 US cents earlier this week before equity market ructions triggered a flight to the perceived safety of the greenback.
