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The share market pared two days of gains as downbeat company profit reports and a collapse in the price of gold compounded weak leads from Wall Street.
The S&P/ASX 200‘s winning run was under threat mid-session with the index down 32 points or 0.5 per cent. The benchmark hit a nine-week high yesterday and started the day 134 points or more than 2 per cent ahead for the week.
The advance ran into trouble this morning following a setback on Wall Street on news that negotiations over a new coronavirus relief package had stalled. The S&P 500 dropped 0.8 per cent and the Nasdaq 1.69 per cent.
Market sentiment was rattled by gold’s heaviest fall in seven years (see more below). The prospects for the day dimmed further as index heavyweight Commonwealth Bank rolled over after reporting an 11.3 per cent decline in full-year net profit after tax. Shares in the largest of the big four banks rose as much as 2.7 per cent before sliding to a loss of 0.8 per cent.
The financial sector has driven the rally all week and was the only sector to rise this morning. CBA’s fall was offset by gains in NAB +1.8 per cent, Westpac +1.7 per cent and ANZ +1.7 per cent. Fund manager Magellan gained 1.7 per cent after reporting a 20 per cent increase in full-year net profit after tax to $438.3 million.
While the financial sector defied dire predictions about this reporting season, results from other sectors were less well received. Online employment marketplace SEEK slumped 9.6 per cent after reporting a net loss after tax of $111.7 million and warning it expects revenues to fall this financial year. News of a 1.9 per cent decline in full-year revenue helped send share registry Computershare down 3.7 per cent Toll road operator Transurban eased 1.4 per cent as COVID-19 stripped 8.6 per cent off daily traffic volumes, underpinning a statutory loss of $153 million. Transport services provider Downer EDI edged up 1.3 per cent as a takeover proposal for Spotless overshadowed a slide in profit.
Recovery plays have performed well this week amid rising hopes that Victoria is getting on top of the coronavirus outbreak. The Victorian government this morning reported 410 new cases, up from two days of tallies in the low 300s. The index’s best performers this morning included building products supplier Reliance +5.2 per cent, shopping centre operator Unibail-Rodamco-Westfield +4.9 per cent and networks specialist Service Stream +4.8 per cent.
Consumer sentiment soured this month as the Victorian lockdown exacerbated fears about the stuttering economy. The Westpac-MI index of consumer sentiment declined 9.5 per cent to 79.5 from 87.9 last month.
“The scale of the fall comes as a major surprise.” Westpac Chief Economist Bill Evans said. “At 79.5, the Index is back near the extreme low of 75.6 seen back in April when Australia entered a national lockdown.”
In Asia, China’s Shanghai Composite dived 1.7 per cent and Hong Kong’s Hang Seng 0.5 per cent. Japan’s Nikkei edged up 0.2 per cent. S&P 500 index futures were recently up a point or less than 0.1 per cent.
Oil clawed back some of its overnight losses. Brent crude bounced 10 cents or 0.2 per cent to $US44.60 a barrel.
The dollar fell 0.2 per cent to 71.28 US cents.
What’s hot today and what’s not:
Hot today: Shareholders in Global Oil & Gas (ASX:GLV) saw their investment briefly double in value after the ambitiously-named market minnow signed an option to acquire a strategic interest in privately-owned WA oil and gas player Goshawk Energy. GLV signed a heads of agreement for an option over a 20 per cent equity stake in Goshawk, which owns several strategic licences in the Canning Basin. The share price shot from 1.1 cents to 2.2 cents before lately trading at 1.9 cents, an advance of 72.7 per cent.
Not today: Gold stocks fell heavily for a second day after the yellow metal suffered its biggest setback in seven years. The gold sub-sector tumbled 5.4 per cent to five-week low as Resolute Mining shed 7 per cent, St Barbara 6.9 per cent, Evolution 6.7 per cent, Saracen Mineral 6.3 per cent, Northern Star 6.1 per cent and Newcrest 3.9 per cent. Gold slumped $93.40 or 4.6 per cent overnight and continued to lose ground this morning, lately down another $43 or 2.2 per cent at $US1,903.30 an ounce.
