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The share market closed at a two-week low after a dramatic escalation in the Russia-Ukraine crisis triggered sharp declines on Asian markets and US futures.
The S&P/ASX 200 skidded 72 points or 1 per cent to 7161. Today’s close was the weakest since February 7.
Speculative and growth stocks led the selling. Gold miners and oil producers rallied on the threat of western sanctions against Moscow.
Cochlear, Costa Group and HUB24 were the pick of companies reporting earnings. Nanosonics, Uniti Group and AUB Group were punished for disappointing results.
What moved the market
Russia and Ukraine lurched closer to a fullblown war after Russia formally recognised two breakaway Ukrainian regions and sent in troops on “peacekeeping” duties. Columns of military vehicles were reported to be moving through Donetsk. Treaties signed today with separatist leaders granted Moscow the right to build military bases within the rebel Donetsk and Luhansk regions.
Ukraine’s Permanent Representative to the United Nations this afternoon said the Russian incursion was a prelude to an invasion.
“There is going to be an invasion, read [Russian President Vladimir] Putin’s words on this,” Sergiy Kyslytsya said.
The US said it would announce new sanctions on Russia tonight. The European Union and United Kingdom indicated they would also sanction Russia.
Today’s developments fuelled risk-off moves on financial markets. Havens such as gold, bonds and the US dollar rallied. The Russian rouble fell more than 5 per cent against the greenback.
“Over the past 24 hours we’ve seen market sentiment rise, fall and then fall some more. Not only has Putin detonated all hopes of peace talks, but has since invaded a country. All within the past 12 hours,” City Index senior market analyst Matt Simpson said.
US futures extended overnight losses ahead of the resumption of regular Wall Street trade tonight. S&P 500 futures sank 68 points or 1.55 per cent. Dow futures declined 456 points or 1.34 per cent. Nasdaq futures sagged 2.18 per cent. US exchanges were closed overnight for Presidents Day.
Europe’s main benchmark fell 1.3 per cent overnight to a three-month low. Asian markets declined this afternoon. The Asia Dow dropped 1.49 per cent, China’s Shanghai Composite 1.36 per cent, Hong Kong’s Hang Seng 2.95 per cent and Japan’s Nikkei 2.02 per cent.
Winners’ circle
Gold miners and oil producers rose with commodity prices on the threat of sanctions against Russia. Northern Star climbed 4.63 per cent, Silver Lake Resources 2.52 per cent and Newcrest 2.32 per cent. Woodside Petroleum firmed 3.76 per cent. Santos added 3.2 per cent.
Strong demand for new products and upgrades drove a 12 per cent increase in first-half constant-currency sales revenues at hearing specialist Cochlear. Underlying net profit improved 26 per cent to $158 million. The share price jumped 9 per cent.
Fruit and veg seller Costa Group rallied 8.67 per cent as record international sales helped drive calendar-year net profit up 16.2 per cent. Revenues from international sales grew 30 per cent.
A record first half lifted HUB24 4.84 per cent. The financial services provider more than doubled underlying net profit to $14.2 million. Funds under administration increased by 128 per cent to $50 billion.
Coles improved 3.17 per cent after maintaining its dividend despite a Covid-induced decline in profits. Increased costs for managing the pandemic helped knock half-year earnings down 4.4 per cent to $975 million. Net profit fell 2 per cent to $549 million. The supermarket chain will pay an interim dividend of 33 cents per share.
Childcare operator G8 Education climbed 5.37 per cent to a 14-month high after returning to profit. The company reported a full-year net profit of $45.7 million, up from a loss of $189 million in CY20.
A 17.7 per cent rise in half-year profit and a strong outlook raised engineering group Monadelphous 10.56 per cent.
Among other companies reporting today, Estia Health gained 3.41 per cent. Perenti Global fell 8.02 per cent, Virtus Health 1.08 per cent, Regis Resources 2.96 per cent, Macmahon Holdings 3.03 per cent, Wispr 5.5 per cent, Jumbo Interactive 6.83 per cent, Macquarie Telecom 1.61 per cent, hummgroup 1.73 per cent, Judo Capital Holdings 2.02 per cent, Johns Lyng Group 3.42 per cent, Superloop 10.7 per cent, Deterra 1.34 per cent, ARB Corporation 1.58 per cent and AUB Group 5.37 per cent.
Doghouse
The tech sector tumbled 3.2 per cent to a 20-month low as investors rotated into havens from assets seen as most vulnerable to deteriorating market sentiment. Tyro Payments fell heavily for a second day, losing 10.22 per cent after yesterday’s earnings disappointment. Novonix shed 5.98 per cent, EML Payments 5.79 per cent and Appen 4.46 per cent.
Other growth stocks to feel the heat included Zip Co -9.7 per cent, Life360 -9.33 per cent and Imugene -8.93 per cent.
Medical device manufacturer Nanosonics slumped 13.14 per cent on news operating expenses increased last half while revenues and profits flattened. Revenues increased 1 per cent to $60.6 million from the previous half. Gross profit was broadly steady at $46.4 million.
Alumina dipped 3.29 per cent after shaving its dividend. The aluminium producer will pay a final dividend of 2.8 US cents per share, down 3 per cent from last year despite a 28 per cent increase in full-year profits.
Seven Group fell 3.09 per cent, with the market reportedly underwhelmed by the conglomerate’s full-year outlook. An earnings miss sent telecom infrastructure specialist Uniti Group down 9.16 per cent.
The biggest drags at the heavyweight end were Afterpay parent Block -4.33 per cent, retail conglomerate Wesfarmers -3.68 per cent and property giant Goodman -2.28 per cent.
The S&P/ASX Emerging Companies Index slid 3.3 per cent to a three-week low. The Small Ords fell 2.2 per cent.
Other markets
Oil maintained its push towards the US$100 level. Brent crude firmed US$1.36 or 1.43 per cent to US$96.75 a barrel.
Gold moved further above US$1,900 an ounce. The yellow metal was lately up US$10.40 or 0.55 per cent at US$1,910.20 an ounce.
The dollar advanced 0.22 per cent to 72 US cents.
