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Aussie shares retreated for the first time in three sessions following a disappointing update from Brambles, declines in bank stocks and gains in oil and gas producers.
The S&P/ASX 200 dropped 30 points or 0.4 per cent by mid-session, reversing yesterday’s advance.
Brambles dived more than 10 per cent after warning short-term costs will undercut this year’s result. Afterpay, Fortescue Metals and the big four banks also declined. Energy stocks surged following delays in restarting US production in the wake of a hurricane in the Gulf of Mexico.
What’s driving the market
The market snubbed positive overnight leads after US stocks needed a late rally to break a five-session losing run. The S&P 500 edged up 0.23 per cent. The broadest of the major indices hit a high at the open and was underwater an hour before the close.
Gains in cyclical stocks lifted the Dow to a more convincing gain of 0.76 per cent. The Nasdaq Composite closed 0.07 per cent in the red as tech stocks struggled.
“Markets overall appear to be in a holding pattern ahead of US CPI [consumer inflation] figures tonight and the FOMC [Federal Open Market Committee meeting] next week ,” NAB Director, Economics, Tapas Strickland, said. “The S&P500 swung between small gains and losses to finish up 0.2% after five consecutive days of losses, helped along by energy stocks.”
The energy sector jumped 3.7 per cent to its highest in almost a month as natural gas and crude prices responded to news US production remained constrained by damage from Hurricane Ida. The US Bureau of Safety and Environmental Enforcement said 43.6 per cent of Gulf oil output and 51.6 per cent of natural gas output were off-line.
“There had been an expectation that a lot of the damage to the infrastructure caused by the storm wouldn’t take too long to fix,” Michael Hewson, chief market analyst at CMC Markets UK, said. “This turns out to be a little wide of the mark, and could well go on for a few weeks more.”
Beach Energy jumped 6.73 per cent, Woodside Petroleum 6.07 per cent, Oil Search 4.41 per cent and Santos 4.21 per cent. AGL Energy bounced 4.61 per cent off a near-decade low.
Supply-chain logistics specialist Brambles dived 10.93 per cent following a poorly-received investor update. Shareholders were spooked by sluggish forecast underlying profit growth of 1-2 per cent this year before a revival in FY23. This year’s figures were significantly lower than market estimates.
The company said it would spend US$50 million this year on “short-term transformation costs”. Revenues were expected to increase 5-6 per cent.
Business confidence improved a fraction last month, but pessimists outnumbered optimists. NAB’s confidence measure rose to -5 from -7 in July. Conditions also picked up to +14 from +10 the previous month.
“While lockdowns in NSW and Victoria and shorter disruptions across other states continue to impact businesses, trading and profitability conditions improved slightly in August. Overall conditions improved 4pts, indicating some resilience in the economy under difficult circumstances,” said NAB chief economist Alan Oster.
Consumer sentiment rebounded strongly in Sydney last week after the NSW state government outlined the road out of lockdown. A 10.6 per cent surge in optimism in the city helped lift the national sentiment index 3.1 per cent to 103.1, according to ANZ and Roy Morgan.
Going up
Gold stocks rose for a third session after the yellow metal inched back towards US$1,800 an ounce. St Barbara firmed 2.92 per cent, Chalice Mining 2.56 per cent and Gold Road Resources 2.49 per cent. Newcrest faded to a mid-session loss of 0.2 per cent.
Telstra rallied 0.51 per cent to a three-week high. Biopharma Clinuvel climbed 3.2 per cent to a near two-year peak.
Rio Tinto shrugged off further weakness in iron ore, rising 0.29 per cent. BHP added 0.31 per cent. Fortescue declined 1.58 per cent.
Going down
Westpac dipped 0.2 per cent after the PNG regulator knocked back the bank’s proposal to sell its stake in Westpac Bank PNG to Kina Bank for $420 million. Kina Securities fell 3.33 per cent. Westpac was looking to divest the business as part of a strategy to simplify operations.
Most of the banks have been stuck in a sideways trading band for the last month. CBA declined 0.53 per cent, NAB 0.43 per cent and ANZ 0.14 per cent. Macquarie Group gained 1.13 per cent.
A rebound in bond yields sapped interest in growth stocks and alternatives to bonds. Afterpay fell 2.39 per cent, Woolworths 1.9 per cent, Goodman 1.24 per cent and CSL 1.1 per cent.
A government contract extension worth more than $100 million in revenue briefly lifted Cimic. Subsidiary company UGL won an extension from Transport for NSW to build and maintain an extra 56 passenger rail cars and install a transformer on the Central Coast. Shares faded to a loss of 0.42 per cent.
Among companies trading ex-dividend, Breville shed 2.71 per cent, Inghams 2.05 per cent, TPG Telecom 1.54 per cent and News Corp 1.52 per cent.
Other markets
Asian markets were mixed. The Asia Dow inched up 0.04 per cent. Japan’s Nikkei added 0.44 per cent. China’s Shanghai Composite dropped 0.18 per cent and Hong Kong’s Hang Seng 0.06 per cent.
S&P 500 futures improved seven points or 0.15 per cent.
Oil added to overnight gains. Brent crude firmed 22 US cents or 0.3 per cent to US$73.72 a barrel.
Gold dipped US$1.50 or 0.1 per cent to US$1,792.90 an ounce.
The dollar edged up 0.04 per cent to 73.68 US cents.
