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The share market faded to its lowest close in a week and a half as upbeat Chinese economic data failed to offset weak leads from Wall Street and commodity markets.
The S&P/ASX 200 deteriorated to a loss of 52 points or 0.78 per cent. Gains in health, technology and retail stocks were comprehensively outweighed by declines in the heavily-weighted bank and mining stocks.
What moved the market
Local action mirrored Friday’s soft end to the week in the US ahead of a market holiday tonight. The S&P 500 sank 0.72 per cent as investors sold banks, oil companies and miners.
US futures sank today but pared sharp early falls after Chinese economic data beat expectations. China’s economy expanded 6.5 per cent last quarter, well ahead of the 6.1 per cent growth predicted by economists. December industrial production also surpassed expectations, expanding by 7.3 per cent.
S&P 500 futures trimmed their decline to nine points or 0.2 per cent. Wall Street is closed tonight for the Martin Luther King Jr public holiday.
Friday’s Wall Street response to President-elect Joe Biden’s US$1.9 trillion coronavirus relief package suggested concern corporate taxes may have to rise to pay for it, according to NAB Currency Strategist Rodrigo Catril. “Biden’s speech… had a thinly veiled comment suggesting a review on tax policy seems likely,” he said.
Biden said, “We can do without punishing a single person by closing tax loopholes for companies that ship jobs overseas, or allow American companies, 90 of the top Fortune 500, to pay zero federal income taxes. Asking everyone to pay their fair share at the top so we can make permanent investments to rescue and rebuild America. It’s the right thing for our economy.”
Going up
Pro Medicus led a rebound in the healthcare sector, surging 11 per cent to a new record. At today’s peak, the radiology specialist had risen by 35 per cent in three sessions since announcing a seven-year deal in the US worth $40 million.
Health stocks have struggled recently, hitting multi-month lows as rising US bond yields lured funds back to the relative safety of the bond market. The sector recovered today after yields dipped at the end of last week. Ramsay Health Care rose 4.3 per cent, ResMed 2.2 per cent and CSL 0.1 per cent.
Other bond proxies to benefit from the fall in yields included Goodman Group +0.5 per cent, Charter Hall Retail +1.4 per cent and BWP Trust +0.7 per cent.
The tech sector rose despite a setback for Afterpay. The BNPL leader hit a new all-time high before fading to a loss of almost 0.9 per cent. Rival Z1P Co advanced 2.1 per cent after completing a share purchase plan. Xero gained 1.9 per cent, Nanosonics 2.4 per cent and WiseTech 2.2 per cent.
JB Hi-Fi led a rise in retailers, climbing 3.8 per cent after reporting a 75.9 per cent jump in half-year pre-tax earnings to $462.7 million. Super Retail Group faded 1 per cent despite reporting a record half included sales growth of 23 per cent and an 87 per cent jump in online sales. Harvey Norman put on 3.7 per cent, Kogan 3.1 per cent and Wesfarmers less than 0.1 per cent. Premier Investments fell 2.3 per cent on news CEO Mark McInnes will step down after ten years.
Going down
The twin pillars of the Australian market – financials and materials – were undermined by negative leads from the US and commodity markets. Iron ore majors BHP and Rio Tinto led the retreat, sinking 2.9 and 1.4 per cent, respectively. Fortescue Metals eased 1.4 per cent. Goldminer Newcrest slid 1.7 per cent.
NAB spearheaded a retreat in the big four banks, falling 2 per cent. CBA shed 0.8 per cent, ANZ 1.5 per cent and Westpac 0.8 per cent.
Insurer QBE dropped 5.7 per cent on news it lost an appeal in the UK, exposing the company to higher claims. The test case revolved around whether policies covered Covid-related claims.
Other markets
Chinese and Hong Kong markets overcame soft starts following the lunchtime economic news. The Shanghai Composite climbed 0.7 per cent and the Hang Seng 0.5 per cent. Japan’s Nikkei dropped 1.18 per cent.
A rising US dollar pressured oil and gold. Brent crude sank 47 cents or 0.9 per cent this morning to $US54.63 a barrel. Gold eased $2.10 or 0.1 per cent to $US1,827.80 an ounce.
The dollar trimmed a bright early advance to 0.16 per cent at 76.86 US cents.
What’s hot today and what’s not
Hot today: Positive drilling results boosted two gold hopefuls. Superior Resources (ASX:SPQ) jumped 42.9 per cent after “spectacular results” at its Steam Engine gold project in Queensland. Managing Director Peter Hwang said latest drilling delivered “the two best holes drilled to date at the project”. Great Boulder Resources (ASX:GBR) rallied 20 per cent after hitting new gold mineralisation at its Blue Poles Prospect in WA.
Not today: A potentially expensive tax dispute in Mali dragged shares in gold miner Firefinch (ASX:FFX) down 10.2 per cent. Just weeks after the company acquired an 80 per cent stake in Societe des Mine de Morila, owner of a gold mine in Mali, the owner received a tax demand. An assessment from the Mali tax department alleges Morila understated income from gold sales in 2017. Firefinch disputes the assessment and said it was seeking a meeting with tax officials.
