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A new financial year started with a reversal as record iron ore exports were overshadowed by declines in banks and supermarkets as NSW Covid cases ticked higher.
The S&P/ASX 200 fell 47 points or 0.65 per cent a day after wrapping up its best fiscal-year return in 34 years. The index closed at its weakest level in eight sessions.
Newcrest, Fortescue Metals and Afterpay cushioned the market from a deeper loss. The biggest IPO of the year overcame an early setback to finish narrowly higher. A profit warning dragged Lendlease to a 14-month low before a partial recovery.
What moved the market
The market took a breather following the best financial year since 1987. The All Ords surged 26.4 per cent last fiscal year. The ASX 200 gained 24 per cent, the best result in the index’s 21-year history.
A lacklustre start gave way to deeper selling after the NSW Premier warned too many people were ignoring coronavirus symptoms. The state recorded 24 new local cases in the 24 hours to 8pm last night, up from 22 the previous day.
“In too many examples we are seeing workers who are leaving the house with symptoms or going to work with symptoms,” Gladys Berejiklian said. “Then inadvertently as they are going about shopping or other activity, they are passing it onto others.”
Queensland recorded two new local cases, NT one case, and Victoria, WA, the ACT and South Australia zero cases.
A bright round of economic data made little impression. Iron ore exports hit a record $16.5 billion in May, thanks to soaring prices. The result helped total exports increase $2.4 billion. Imports increased $919 million.
Fortescue Metals, the purest of the three major ore miners, climbed 1.07 per cent. Rio Tinto slipped 0.51 per cent. BHP eased 0.72 per cent. Champion Iron gained 2.51 per cent.
House prices climbed 1.9 per cent last month, according to the CoreLogic Home Value Index. Prices across the nation’s capitals have jumped 13.5 per cent this year.
Rival manufacturing gauges painted a healthy picture of factory activity. The AIG Manufacturing Index rose to 63.2 last month from 61.8 in May. The IHS Markit manufacturing PMI eased to 58.6 from 60.4. Readings above 50 indicate expanding activity.
“Australia’s manufacturing sector continued to expand at a strong pace despite some signs of disruption from the Victoria lockdown that lingered into June,” Markit economists noted.
Tepid overnight leads contributed to a lack of urgency as a new year got underway. The S&P 500 edged up 0.13 per cent to a fifth straight record close. The Nasdaq Composite retreated 0.17 per cent.
Winners’ circle
The biggest float of the year overcame a rocky start to finish ahead for the day. Online property settlement platform PEXA fell as much as 4.3 per cent in the opening minutes of trade before reversing to a final gain of 0.12 per cent. With a market valuation of $3.3 billion, today’s IPO was the largest since 2019.
The best performer of the day was another debutant. Mining minnow Australian Rare Earths surged 83.33 per cent. The Adelaide-based explorer is focussed on finding ionic clay rare earth resources.
Gold stocks were among the morning’s best performers following an overnight rebound in precious metals. Regis Resources climbed 8.05 per cent, St Barbara 5.57 per cent and Newcrest 2.06 per cent.
Embattled data analytics firm Nuix bounced 5.43 per cent from yesterday’s record closing low. Other notable gains included EML Payments +4.31 per cent, IGO +4.19 per cent and Nearmap +3.19 per cent.
Adbri hit a post-pandemic high, rising 1.44 per cent on news it was part of a joint venture that will acquire the Milbrae concrete and aggregate business. Milbrae operates 13 quarries and seven fixed concrete plants in the Riverina district.
Afterpay gained 0.74 per cent. Woodside added 0.32 per cent.
Doghouse
Lendlease dived 9.5 per cent before regaining two-thirds after warning full-year profits would fall short of consensus. Delays relating to the UK’s struggles with the pandemic were expected to help cut operating profit to $375 – $410 million. The market had expected a figure nearer $460 million. The share price finished 2.79 per cent of at $11.14 after trading as low as $10.37.
Some of the heat came out of the “lockdown trade”. Supermarkets Woolworths and Coles – two of the prime movers over the last week – fell 1.63 and 1.52 per cent. Metcash lost 4.51 per cent as it traded without the right to a dividend.
Banks were among the biggest drags. CBA shed 1.17 per cent, ANZ 0.43 per cent, NAB 0.69 per cent and Westpac 0.62 per cent.
REA Group eased 0.55 per cent after completing the acquisition of Mortgage Choice.
Other markets
US futures shrugged off a red afternoon on most Asian markets. S&P 500 futures firmed eight points or 0.18 per cent.
The Asia Dow dropped 0.27 per cent. Japan’s Nikkei dipped 0.38 per cent. China’s Shanghai Composite reversed to a rise of 0.33 per cent,
Oil continued to rally into tonight’s OPEC+ meeting. Brent crude climbed seven cents or 0.07 per cent to US$74.69 a barrel.
Gold gathered steam as the session advanced, rising $5.80 or 0.33 per cent to US$1,777.40 an ounce.
The dollar eased 0.19 per cent to 74.83 US cents.
