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The share market reversed for a second day as earnings disappointments overshadowed strong jobs data and a decline in new coronavirus cases.
Strong leads from Wall Street did not translate into ASX gains as CBA’s full-year result weighed on the banks and investors took a heavy stick to Telstra and AGL Energy. The S&P/ASX 200 reached mid-session 39 points or 0.6 per cent in the red after an opening surge faltered.
The market extended its losses after the July employment report beat expectations. Total employment increased by 114,700 last month, almost four times as much as economists predicted. The economy added 43,500 full-time positions and 71,200 part-time roles. Despite the gains, the jobless rate ticked up to 7.5 per cent from 7.4 per cent as more people actively looked for work.
AGL Energy, the second biggest utility on the index by market value, plunged 9.4 per cent after announcing a 22 per cent fall in full-year underlying profit after tax and flagging another sharp decline this financial year. Managing Director and CEO Brett Redman said FY21 “will be a year of considerable uncertainty as we navigate the COVID-19 pandemic and its economic impact.”
Telecommunications giant Telstra also felt the wrath of disappointed investors, falling 6.8 per cent despite meeting market guidance for FY20. The company warned it expects a drop in total income this financial year to below $25.1 billion from $26.2 billion in FY20. CEO Andrew Penn said the impacts of COVID-19 “will be with us for some time”.
The financial sector declined for the first time in four sessions as CBA continued yesterday’s post-earnings decline. CBA shed 2.5 per cent, ANZ 1.8 per cent, NAB 1.8 per cent and Westpac 1.4 per cent. NAB is scheduled to release a quarterly update tomorrow. AMP was the sector’s best performer, climbing 10.5 per cent as news of a special dividend offset a plunge in underlying profit of 52 per cent.
Tech stocks bucked the trend following a stellar night on Wall Street. The Nasdaq jumped 2.13 per cent, outpacing rises of 1.4 per cent on the S&P 500 and 1.05 per cent on the Dow Jones Industrial Average. Here, WiseTech bounced 3.8 per cent, Iress 3 per cent and Afterpay 2.4 per cent.
Business updates provided most of the morning’s big winners and losers. Treasury Wine Estates surged 13.7 per cent, Premier Investments 8.2 per cent, QBE 5.8 per cent, Flight Centre 3.4 per cent and Goodman Group 2 per cent. At the other end of the index, Breville Group slumped 6.2 per cent and Charter Hall Retail 4.5 per cent. Woodside Petroleum eased 0.8 per cent after reporting an eye-watering full-year net loss of US$4.067 billion.
News of a drop in new coronavirus cases in Victoria appeared to have little impact. The state government reported 278 new cases, down from 410 yesterday and less than half last week’s peak of 725 new cases. NSW reported 12 new cases.
A positive morning on Asian markets saw China’s Shanghai Composite rise 0.4 per cent, Hong Kong’s Hang Seng 0.2 per cent and Japan’s Nikkei 1.9 per cent. S&P 500 index futures traded unchanged.
Oil eased back from an overnight five-month high. Brent crude dipped 13 cents or 0.3 per cent to $US45.30 a barrel. Gold slid $1 or 0.1 per cent to $US1,948 an ounce.
The dollar was ahead 0.08 per cent at 71.68 US cents.
What’s hot today and what’s not:
Hot today: The Polynesian sedative kava may become a feature on Australian pharmacy shelves after Fiji Kava (ASX:FIJ) signed a deal with a subsidiary of natural-health giant Blackmores (ASX:BKL). Fiji Kava and BioCeuticals will collaborate on a product using herbs and FIJ’s noble kava extract to relieve mild anxiety, tension and stress. AnxioCalm will bear both companies’ brands. Kava comes from a Polynesian shrub and is a popular non-alcoholic traditional relaxant in Fiji. Fiji Kava’s share price jumped 3.8 cents or 43.7 per cent to 12.5 cents.
Not today: An unexpected 1.8 per cent drop in full-year net profit after tax due to significant abnormal expenses helped send market darling Breville Group (ASX:BRG) into reverse. The kitchen appliance maker had been one of the pandemic’s best recovery plays as the share price almost tripled from a March low of $10 to $28.84 this week. The share price fell 6.2 per cent this morning after the company raised its provisions for doubtful debts and wrote down its tech platforms.
