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Aussie shares drifted lower for a second day after a profit warning from Apple weighed on US index futures and investors waded through a deluge of domestic corporate earnings.
The ASX 200 dropped 16 points or 0.2 per cent to 7109 by mid-session, adding to yesterday’s five-point loss. Activity on the local market slowed this week as Wall Street took a long weekend for Presidents Day.
The outlook for the resumption of US trade tonight was soured by a profit warning from one of the world’s largest companies by market capitalisation. Apple announced that the impact of the Covid-19 virus on production meant the company will miss its financial targets for the second quarter. S&P 500 index futures turned south, lately down nine points or 0.27 per cent.
Back home, mining heavyweight BHP topped a long list of companies reporting half or full-year earnings. Shares in the Big Australian rose 0.6 per cent on news of a 29 per cent lift in half-year profit to $US4.9 billion. The company announced a 65 US cent interim dividend, its second highest ever.
Supermarket Coles retreated 0.7 per cent after announcing 3.3 per cent growth in first-half sales revenue and a fully-franked interim dividend of 30 cents.
Uncertainty over the effects of the viral outbreak was a recurring theme this morning. Shares in hearing device maker Cochlear sank 3.6 per cent after warning the virus could clip up to $30 million off its underlying full-year net profit. The company cut its guidance from $290-$300 million to $270-$290 million.
Ansell CEO Magnus Nicolin said the virus would have positive and negative impacts on the rubber products manufacturer. While Chinese plant shutdowns were a negative, the company was meeting significant demand for its personal protective equipment. Shares declined 4.1 per cent after the company maintained full-year guidance but warned of uncertainties around the global economy and trade.
Technology was the worst of the 11 sectors, sliding 2.1 per cent after the virus clouded the outlook for sector leader Altium. The software designer’s shares tumbled 14.3 per cent after the company warned it expected to meet the lower end of its guidance due to uncertainty about the virus and problems with excess inventory. Broker Ord Minnett downgraded its rating.
A rebound in three of the big four banks was tempered by a sharp drop in Bendigo Bank following a capital raise and a round of broker downgrades. Shares in Bendigo dived 5 per cent to $10.04. CBA and Westpac were the best of the big four with rises of 0.5 per cent. NAB eased 0.1 per cent.
The dollar sank after the minutes from this month’s Reserve Bank meeting showed the board considered Covid-19 a “material” risk to the economy and considered cutting its key rate. The bank opted to hold the cash rate steady at 0.75 per cent because of the risk further easing would encourage more borrowing at a time when house prices were rebounding strongly. The dollar was lately down 0.37 per cent at 66.88 US cents as forex traders revised their rates outlook.
Asian markets deteriorated. China’s Shanghai Composite dropped 0.19 per cent, Hong Kong’s Hang Seng 0.87 per cent and Japan’s Nikkei 0.92 per cent.
Brent crude skidded 43 cents or 0.75 per cent this morning to $US57.24 a barrel. Gold rallied $2.40 or 0.15 per cent to $US1,588.90 an ounce.
What’s hot today and what’s not:
Hot today: The coronavirus bandwagon gained a new passenger when juice-maker The Food Revolution Group (ASX:FOD) announced it was pivoting towards the burgeoning market for hand sanitisers. FOD announced it will use its new bottling line at Mill Park in Melbourne to produce sanitisers to meet shortages in Asia. Production will start before the end of the month under a new ‘Sanicare’ brand. Shareholders liked the switch of direction, lifting the share price 52.6 per cent to 8.7 cents.
Not today: Shares in Kerry Stokes’s Seven West Media (ASX:SWM) plumbed record lows after the TV and publishing group posted a half-year statutory loss of $67 million. Net profit and earnings were both down more than 20 per cent on the previous year. Managing director and CEO James Warburton said “transformative M&A [mergers and acquisitions] opportunities are very much on the agenda.” The share price sank 17.3 per cent to 21.5 cents.
