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A see-saw week drifted towards a lacklustre conclusion with investors reluctant to add to positions near 14-month highs following an overnight slump on Wall Street.
The S&P/ASX 200 eased 15 points or 0.2 per cent towards its third loss of the week. Mid-session, the index was on track to end the week a bare 20 points below where it started despite Monday’s near 14-month peak and Wednesday’s two-week low.
What’s driving the market
A mixed session saw gains in Fortescue Metals, Goodman Group and NAB partly offset declines in Wesfarmers, BHP, CSL and CBA. Sector moves were limited: REITs was best with a rise of 0.27 per cent, consumer staples worst with a fall of 0.88 per cent.
The index dipped almost 20 points in early action after the threat of a tax hike triggered a sell-off in the US. The S&P 500, Dow and Nasdaq lost between 0.92 and 0.94 per cent following a report the White House was considering doubling capital gains tax for wealthy Americans. The tax hike would help pay for childcare, education and paid family leave under President Joe Biden’s American Families Plan.
“Rightly or wrongly – there’s a long way to go before the proposed capital gains tax hike might become reality- [the] capital gains tax story has spooked US equity markets somewhat,” NAB Head of FX Strategy Ray Attrill said.
US futures recovered this morning in a sign the latest dip might prove another buying opportunity. S&P 500 futures rose seven points or 0.16 per cent.
“It is to be seen whether ‘buy the dip mentality’ now takes a strong hold amid equity traders, or the US corporate earnings season reveals some glimmers of hope for the bulls.,” Kalkine Group CEO Kunal Sawhney said.
Back home, the dollar bounced 0.2 per cent to 77.19 US cents after the strength of the domestic recovery was underlined by the strongest growth in private sector output since the survey began five years ago. The IHS Markit Flash Australia Composite Output Index climbed to 58.8 from 55.5 last month.
“Australia’s private sector started the second quarter on a strong footing, with growth of output accelerating for the second time in a row to the steepest on record,” Pollyanna De Lima, Economics Associate Director at IHS Markit, said. “Sales were boosted by improved market confidence due to a reduction in the negative impact of Covid-19.”
Going up
Fortescue Metals was the best of the heavyweights, rising 1.27 per cent despite a second straight drop in iron ore yesterday. Rio Tinto inched up 0.11 per cent. BHP trimmed a deeper opening fall to 0.63 per cent.
Real estate was among yesterday’s best performers and led again today. Goodman Group gained 1.04 per cent, Charter Hall Group 2.5 per cent and Stockland 0.76 per cent.
A mixed session for the banks saw NAB rise 0.17 per cent, ANZ trade flat, CBA dip 0.1 per cent and Westpac lose 0.46 per cent.
AMP bounced 1.56 per cent off a 12-month low after announcing plans to demerge its private markets business after sale discussions with a US investment firm failed to produce a deal. Chair Debra Hazelton said a demerger would better serve both the firm’s retail and institutional client bases. Shareholders would receive shares in the new company.
Accent Group rallied 6.92 per cent to an all-time high on news the retailer will acquire youth apparel chain Glue Store and Next Athleisure for $13 million. Accent already operates a range of brands, including Athlete’s Foot, Timberland, Dr Martens and Vans.
Going down
A spike in operating costs sent online retailer Kogan down 12.75 per cent. Adjusted quarterly earnings declined by almost a quarter as a dip in customer demand caused unsold inventory to pile up, incurring higher warehousing costs. The company intends to increase promotions to move stock.
Oil Search eased 0.53 per cent after reaffirming full-year production guidance but cutting its investment spend as Covid ravaged Papua New Guinea. First-quarter operating revenue increased by 16 per cent from December, despite a 2.7 per cent dip in production.
Telstra shed 0.15 per cent after announcing it spent $277 million to secure 1000 MHz in the 26 GHz spectrum to extend its footprint in the 5G space. CEO Andrew Penn said the new spectrum would “dramatically increase capacity and speeds for Telstra customers”.
Supermarkets Woolworths and Coles dropped 0.84 and 0.82 per cent, respectively. Other heavyweight drags included Brambles -1.74 per cent, Newcrest -1.33 per cent, Afterpay -1.21 per cent and Wesfarmers -0.93 per cent.
Other markets
Asian markets were mostly higher. The Asia Dow put on 0.14 per cent. China’s Shanghai Composite advanced 0.36 per cent and Hong Kong’s Hang Seng 0.85 per cent. Japan’s Nikkei retreated 0.72 per cent.
Oil built on slender overnight gains. Brent crude climbed 28 cents or 0.43 per cent to US$65.68 a barrel.
Gold recouped around half of its overnight losses, rising $5.80 or 0.33 per cent to US$1,787.80 an ounce.
