Risk-off moves in US equity futures, crude and currency markets helped drag the ASX to its first loss in four sessions.
The S&P/ASX 200 dropped 41 points or 0.54 per cent, erasing more than half of this week’s gains.
Earnings misses pulled Appen, A2 Milk and Link Administration to heavy losses. Better received were updates from Qantas, Flight Centre and Woolworths. This week’s tentative rebound in bulk metal miners petered out.
What moved the market
The ASX 200 finished near its session low as traders trimmed their exposure across a range of financial instruments ahead of the US Federal Reserve‘s annual economic symposium, which starts tonight. Defensive assets rallied and risk assets declined ahead of a meeting where Fed Chair Jerome Powell may discuss unwinding support for the US economy.
“Either unexpected commentary from the Fed or a failure or success in [the S&P 500] scaling 4500 could bring additional volatility to the stock and bond markets,” Jim Paulsen, chief investment strategist at the Leuthold Group said.
S&P 500 futures declined 0.2 per cent before trimming their fall to five points or 0.1 per cent. In Asia, China’s main benchmark fell 0.61 per cent. The Hang Seng in Hong Kong shed 1.41 per cent, the Asia Dow 0.35 per cent and Japan’s Nikkei 0.05 per cent.
Brent crude retreated 30 US cents or 0.42 per cent to US$70.98 a barrel. The Australian dollar eased 0.16 per cent to 72.65 US cents as the greenback – a traditional haven – firmed for the first time in five sessions. Gold, which has an inverse relationship with the US dollar, dipped US$3.10 or 0.17 per cent to US$1,787.90 an ounce.
Investors sniffed at another round of record closes in the US. Overnight, the S&P 500 inched up 0.22 per cent to a new closing high of 4,496. The Nasdaq Composite also closed at a record, rising 0.15 per cent.
Declines on one of the heaviest days of the full-year earnings season outweighed rises. Newcrest, Coles and JB Hi-Fi dragged as they traded without their dividends.
The launch of a $2 billion share buyback and a stronger-than-expected full-year profit helped lift Woolworths 0.42 per cent. A 5.7 per cent increase in sales boosted earnings 13.7 per cent to $3.663 billion. Net profit improved 22.9 per cent to $1.972 billion.
Qantas rose 3.49 per cent to a four-month high after CEO Alan Joyce said the airline was in a stronger position this year despite an underlying full-year loss of $1.83 billion. Domestic activity between lockdowns helped the airline reduce net debt to $5.9 billion from $6.4 billion in February. Full-year underlying earnings were $410 million, in line with guidance.
Mr Joyce said trading conditions had “frankly been diabolical”, but “we’re in a far better position to manage it than this time last year. We’re able to move quickly when borders open and close. We’re a leaner and more efficient organisation.”
Trans-Tasman rival Air New Zealand eased 1.69 per cent after reporting a NZ$440 million full-year loss.
A Covid-era revenue record in June helped propel Flight Centre 4.04 per cent to a four-month high. The travel agent said trading conditions improved this year as vaccination programs gained momentum and travel restrictions eased. A full-year underlying loss of $507 million was in line with guidance.
A resumption of pre-Covid dividend payments helped cushion private health care company Ramsay from a full-year profit miss. The company will pay a final dividend of $1.03 a share, bringing the full-year payout to $151.5 cents, equivalent to the FY19 dividend. Statutory profit rose 58.1 per cent to $449 million, shy of the $477 million market estimate. The share price improved 1.77 per cent.
Theme park operator Ardent Leisure surged 21.63 per cent after reporting a rebound in full-year earnings as its US operations recovered. Earnings improved by $24.9 million to $30.6 million.
Other winners from today’s earning updates included Blackmores +15.42 per cent and Whitehaven Coal +4.95 per cent.
The list of winners was comprehensively outweighed by losers. Link Administration fell 12.62 per cent, IOOF 10.43 per cent, Cromwell Property 1.1 per cent, Costa Group 4.42 per cent, Qube 0.33 per cent, St Barbara 2.85 per cent, AUB Group 6.78 per cent, Starpharma 5.51 per cent, Jumbo Interactive 10.18 per cent and Platinum Asset Management 9.63 per cent.
Much of the day’s excitement was again in the tech sector. A day after WiseTech lit up the boards with a fleeting surge of 59 per cent, Appen seized the spotlight for the wrong reasons. The artificial intelligence specialist dived 21.42 per cent on a guidance downgrade and 55.1 per cent decline in full-year statutory net profit. Revenues fell 2 per cent. The AI specialist also announced the acquisition of mobile location business Quadrant.
A2 Milk announced a review of its business strategy after full-year net profit collapsed 79.1 per cent to $80.7 million. Earnings declined 77.6 per cent as the daigou market in China dried up and birth rates fell. The share price slumped 11.81 per cent.
Woolies spin-off Endeavour eased2.22 per cent after declaring its maiden profit and dividend payment. Full-year group sales increased 9.3 per cent to $11.595 billion. The company, which owns the Dan Murphy’s and BWS brands, will pay a final dividend of seven cents per share.
Several major companies went ex-dividend. Coles declined 1.84 per cent, Newcrest 3.29 per cent and JB Hi-Fi 4.36 per cent.
Rio Tinto declined 1.39 per cent, BHP 1.17 per cent and Fortescue Metals 1.38 per cent.