ASX Close: REITs rally as lockdowns lift

Gains in property stocks helped the share market to a four-week closing high following a record night on Wall Street.

The S&P/ASX 200 overcame early weakness and a late fade to finish with a skinny gain of two points or 0.02 per cent.

Real estate investment trusts spearheaded the advance as the easing of lockdown restrictions boosted the outlook for landlords. Well-received trading updates lifted AMP, Perpetual, Healius and CIMIC.

What moved the market

The REIT sector was the session’s standout, rising almost 1.7 per cent to a four-week high. Westfield operator Scentre Group climbed 3.32 per cent to its strongest finish in almost a year as Melbourne prepared to exit lockdown. Rent collection is expected to improve as shoppers return.

Elsewhere in the sector, integrated property group Goodman rallied 1.93 per cent, Dexus 1.87 per cent and Stockland 2.16 per cent. Mirvac firmed 2.41 per cent as strength in residential sales helped offset the impact of lockdowns on retail rent collection.  

“Last year, we saw weakened cash collection rates in the retail sector quickly improve once restrictions eased and normalised trading conditions returned,” Mirvac’s Head of Integrated Investment Portfolio, Campbell Hanan, said.

US stocks rallied overnight for a sixth straight session. The Dow Jones Industrial Average hit record territory before trimming its advance to 0.43 per cent. The broader S&P 500 put on 0.37 per cent.

Asian markets struggled after a deal to help save troubled Chinese developer Evergrande fell through. Shares in the property giant plunged almost 11 per cent after rival developer Hopson said it was unable to complete the purchase of a stake in Evergrande’s property management arm. The failure to raise cash left Evergrande staring at a default on its debt as soon as this weekend.

Hong Kong’s Hang Seng, where Evergrande is listed, fell 0.29 per cent. The Asia Dow dipped 0.82 per cent and Japan’s Nikkei 1.51 per cent. China’s Shanghai Composite gained 0.46 per cent.

The declines kept US equity futures underwater. S&P 500 futures retreated ten points or 0.22 per cent.

Winners’ circle

News of a boom in revenues from Covid-19 testing lifted pathology firm Healius 4.4 per cent. Unaudited group revenues jumped 44 per cent over the first quarter to $690 million. Underlying earnings soared 159 per cent during what CEO Malcolm Parmenter described at today’s AGM as “an extraordinary start to the year”.

An earnings upgrade boosted BlueScope 0.75 per cent. The steelmaker raised its first-half guidance for underlying earnings to $2.1-$2.3 billion from previous guidance of $1.8-$2 billion. CEO Mark Vassella said the business benefitted from strong spreads, prices and demand.

Battered wealth manager AMP climbed 4.02 per cent amid signs outflows were slowing. The company reported net cash outflows of $1.4 billion last quarter, an improvement from a loss of $1.8 billion over the same period last year. Positive market returns kept assets under management steady at $131.2 billion.

CIMIC rose 5.85 per cent after reaffirming full-year guidance. The engineering group made $303 million in net profit over the first nine months of the year and secured $16 billion in new work.

Aristocrat Leisure hit an all-time high on strong demand from institutions for an entitlement offer to help fund the acquisition of UK gaming software developer Playtech. The Australian firm surged 3.27 per cent to $47.10 after a bookbuild for shortfall shares cleared at a premium of $5.25 to the offer price of $41.85 per share.

A strong start to the financial year lifted Perpetual 7.79 per cent. The fund manager increased assets under management by 2.7 per cent over the first quarter to $101 billion.

Macquarie Group climbed 0.94 per cent to an eighth straight record. NAB put on 0.24 per cent and Westpac 0.58 per cent. CBA dropped 0.08 per cent and ANZ 0.53 per cent.

Doghouse

Rio Tinto was among the biggest drags following a negative reaction on overseas markets to the miner’s plans to invest in wind and solar power to reduce its carbon footprint. Australian shares fell 1.32 per cent following declines of 3.26 per cent in London and 3.89 per cent in New York.

BHP eased 0.23 per cent and Fortescue Metals 0.62 per cent.

Woodside fell 2.32 per cent on news production dipped 2 per cent last quarter. Strong gas prices helped the energy giant increase sales revenue by 19 per cent to $1.531 billion.

Record third-quarter sales revenue failed to lift Santos during a generally negative session for energy stocks. The company increased sales revenue by 6 per cent to US$1.14 billion and reported a 33 per cent jump in free cash flow to US$359 million. The share price dipped 1.1 per cent.  

Transurban shed 1.3 per cent after reporting the impact of lockdowns on toll volumes in Sydney and Melbourne during the September quarter. Average daily traffic on the firm’s toll roads were 12.4 per cent lower than the same time last year and 34.5 per cent weaker than in Q319 despite improvements in Brisbane and the US.

Flight Centre sagged 5.82 per cent following a broker downgrade. Jarden cut its rating on the travel agent to ‘Neutral’ with a target of $21.30.

Other markets

Oil pulled back from a three-year peak. Brent crude dropped 14 US cents or 0.16 per cent to US$85.68 a barrel.

Gold was steady at US$1,784.90 an ounce.

The dollar retreated from its highest level since July, falling 0.13 per cent to 75.05 US cents.