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Stocks retreated from record highs as strong jobs growth undermined the case for further rate cuts.
The ASX 200 fell 41 points or 0.6 per cent to 7092 by mid-session, erasing almost two-thirds of yesterday’s 66-point surge.
Early losses deepened following the 11.30 am EST release of jobs figures showing the unemployment rate fell last month as the economy created more than twice the number of jobs expected by economists. The jobless rate declined to 5.1 per cent from 5.2 per cent in November as the number of people in employment increased by a seasonally-adjusted 29,000. The analyst consensus beforehand was for growth of around 12,200. The gain means the economy has created 67,500 jobs in two months, undermining the argument for a cut to the cash rate at next month’s Reserve Bank meeting. The dollar jumped almost two-fifths of a cent to 68.69 US cents.
Industrials was the worst of the sectors, sagging 2 per cent after updates from construction and engineering groups Downer and Cimic (formerly Leightons). Downer shares briefly lost a quarter of their value before paring their loss to 20.4 per cent after the group cut its profit guidance. The company blamed unexpectedly high costs on loss-making construction contracts, restructuring costs and delays in mining projects. Shares fell as low as $6.45 before partially rebounding to $6.96.
Cimic shares hit a three-year low after the company announced it was scrapping its final dividend and abandoning the Middle East to focus on core markets closer to home. The company announced a one-off post-tax hit of $1.8 billion this financial year as it exits its 45 per cent share in BIC Contracting. Shares fell 19.6 per cent to a level last seen in November 2016.
The energy sector slumped 1.8 per cent after oil fell to a seven-week low overnight. Beach Energy shed 4.6 per cent, Oil Search 2 per cent, Santos 1.8 per cent and Woodside1.8 per cent. The sell-off in Brent continued this morning, sending crude for March delivery down 96 cents or 1.5 per cent to $US62.26 a barrel.
The health sector retreated 0.7 per cent from yesterday’s record close. Sector leader CSL, which has benefitted from interest in possible treatments for the coronavirus, eased 0.8 per cent. Cochlear shed 2.1 per cent.
Among the market leaders, Commonwealth Bank nudged up 0.4 per cent. BHP eased 0.3 per cent and Rio Tinto 0.7 per cent.
Today’s market retrace followed a flat night on Wall Street, where the major indices finished near session lows after a positive start. The S&P 500 edged up less than a point or 0.03 per cent, while the Dow shed ten points or 0.03 per cent.
Asian
markets extended this week’s losses as the coronavirus death
toll in China rose to 17. The Shanghai Composite shed 0.77 per cent, Hong
Kong’s Hang Seng 1.03 per cent and Japan’s Nikkei 0.65 per cent. S&P 500 index
futures slipped 1.5 points or less than 0.1 per cent.
Gold put on $4.40 or 0.3 per cent to
$US1,561.10 an ounce.
What’s hot today and what’s not:
Hot today: The index’s best performer was self-storage operator National Storage REIT (NSR), which leaped 5.8 per cent to an all-time high after confirming speculation it had received a takeover offer from private equity fund Gaw Capital Partners. The company said Gaw’s proposal was confidential, non-binding and conditional, and discussions were at a preliminary stage. Shareholders should take no action until further notice. Online travel agent Webjet rose 3.9 per cent following a report the company is preparing to let potential suitors into its data room.
Not today: shares in Biotron (BIT) took off late yesterday after astute traders noted the junior biotech had filed a patent in the US for a possible treatment for the coronavirus. Shares jumped from 6 cents to 8.4 cents by the close. A sobering session today saw the shares retreat 13.1 per cent or 1.1 cents to 7.3 cents after the company responded to a ‘Please Explain’ letter from the ASX without mentioning coronavirus.
