A fleeting share market rally stalled as tanking oil prices weighed on US index futures and Westpac announced a $2.2 billion hit from bad loans.
The S&P/ASX 200 briefly extended its three-day advance beyond 150 points before slashing a 52-point rally to a single point or less than 0.1 per cent at the halfway mark.
Share markets around the world have moved higher this week on signs governments are looking to relax restrictions imposed to slow the spread of COVID-19. The S&P 500 in the US climbed 42 points or 1.47 per cent overnight after several states declared restaurants could re-open, and other states mapped out timelines to restart their economies.
The Australian market has faced stiff headwinds from the financial sector this week. Westpac this morning announced it expects impairment charges of $2.24 billion for the first half of the year. The charge includes approximately $1.6 billion primarily related to the impact of COVID-19. CEO Peter King said the bank was “well positioned to absorb this increase and respond to future developments.” The share price lifted 2.3 per cent.
The announcement comes a day after National Australia Bank declared it was slashing its interim dividend and seeking to raise $3.5 billion in new equity. Institutions who forked out at $14.15 a share were rewarded this morning when trade resumed. The share price quickly ran up to $15.41, a drop of 2.2 per cent on Friday’s last traded price. The sector as a whole gained 0.8 per cent as CBA put on 0.2 per cent and ANZ 0.8 per cent.
The consumer discretionary sector was the morning’s best performer as traders anticipated a return to normal life after New South Wales this morning joined Queensland and Western Australia by announcing a modest easing of social distancing measures. Domino Pizza climbed 4.1 per cent, Aristocrat 2.8 per cent, Crown Resorts 1.4 per cent, Tabcorp Holdings 1.2 per cent and Wesfarmers 0.5 per cent.
Index gains were capped by declines in health, energy and mining stocks. Health giant CSL sagged 1.3 per cent, outweighing gains of 2.3 per cent in Fisher & Paykel and Sonic Healthcare.
Another torrid morning on oil markets weighed on local producers. Santos fell 1.9 per cent, Beach Energy 4.5 per cent and Woodside 0.8 per cent. Overnight, US crude dived 24.6 per cent and the international benchmark, Brent crude, slumped 6.8 per cent. The latest downturn showed no signs of letting up this morning: West Texas Intermediate sank $1.92 or 15 per cent to US$10.86 a barrel and Brent crude dropped 86 cents or 4.3 per cent to US$19.13 a barrel.
The picture across the broader materials spectrum was mixed. Newcrest fell 2.3 per cent, Rio Tinto 1.4 per cent and South32 2.4 per cent. Fortescue edged up 0.5 per cent and BHP 0.2 per cent.
Builder Lendlease entered a trading halt after announcing plans to raise up to $1.15 billion in a share placement to strengthen the balance sheet. Fertility services provider Monash IVF sank 17.8 per cent to 54.5 cents after raising $65 million at 52 cents. Charter Hall Retail Group resumed trading at $3, a fall of 4.8 per cent after raising $275 million at $2.90.
A mixed morning on Asian markets saw China’s Shanghai Composite and Japan’s Nikkei down 0.6 per cent, and Hong Kong’s Hang Seng ahead 0.2 per cent. S&P 500 index futures dipped eight points or 0.3 per cent.
Gold declined $6.20 or 0.4 per cent this morning to $US1,717.60 an ounce.
The dollar faded 0.3 per cent to 64.42 US cents.
What’s hot today and what’s not:
Hot today: Empired (ASX:EPD) turned a few heads this morning with an ASX announcement with the grandiose headline: “EPD inks largest deal in history with Western Power win”. The announcement revealed that the deal in question was for a pair of contracts for EPD to provide a West Australian government-owned corporation with IT services for up to seven years. Together the two contracts are worth roughly $61 million to EPD over an initial five-year term. Shareholders welcomed the news by lifting the share price 25.9 per cent.
Not today: One of the stranger features of recent trade has been massive unexplained runs on previously dormant stocks. Jupiter Energy (ASX:JPR) set the benchmark last week when it shares ran up 17,400 per cent in two sessions despite a company announcement that it had no idea what was driving buying. The company’s shares went into suspension this morning while the company works with regulators to understand the activity. Shares in KalNorth Gold (ASX:KGM) surged 567 per cent yesterday and briefly continued higher this morning despite the junior gold explorer telling the market it had no explanation for the rally. KGM shares were last down 25 per cent at 1.5 cents, still a premium of 400 per cent over yesterday’s opening price.