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Australian shares faded towards a weekly loss as a fresh lockdown in Victoria compounded soft leads from the US.
The S&P/ASX 200 declined 24 points or 0.34 per cent by mid-session, erasing the last of its gains for the week. The decline placed the index on track to end a see-saw week more than 15 points below where it started.
What’s driving the market
The first big week of the half-year earnings season saw minimal change as winners and losers cancelled each other out and investors waited for Wall Street to pick a direction. US stocks have gone sideways for the last three sessions after all-time highs on Monday. Overnight, the S&P 500 edged up 0.17 per cent.
“The week saw the global equities rally taking a breather amid virus mutants causing havoc across the globe,” Kalkine Group CEO Kunal Sawhney said. “Stocks are trading at high valuations, raising fears that the market is overvalued. So, a prudent blend of fundamental and technical evaluation is a must while making portfolio adjustments in line with the entire market mood.”
Investors kept a wary eye on events in Victoria, where a growing Covid cluster from Melbourne Airport’s Holiday Inn raised fears of another lockdown. The total number of cases linked to the outbreak reached 13 this morning. The Victorian cabinet were locked in a meeting this morning to determine whether to announce fresh restrictions. Media reports shortly before publication suggested the state would lock down for five days.
The latest development cast a cloud over travel and tourism stocks. Corporate Travel Management eased 3.3 per cent, Webjet 3.3 per cent, Qantas 3 per cent and Flight Centre 2.5 per cent.
Going up
Movements at the pointy end of the market were limited. Goodman was the only company in the ASX 20 to rise more than 1 per cent. The property giant, which reports next week, edged up 1.5 per cent.
Telstra put on 0.9 per cent after CEO Andrew Penn yesterday talked up the company’s prospects. Supermarkets Coles and Woolworths, which benefit from stockpiling in lockdown, gained 0.7 and 0.1 per cent, respectively.
A mixed morning for the banks and miners saw Fortescue rally 0.7 per cent, Commonwealth Bank 0.4 per cent and ANZ less than 0.1 per cent. Westpac shed 0.3 per cent, NAB 0.2 per cent, Newcrest 0.6 per cent, Rio Tinto 1 per cent and BHP 1.2 per cent.
Scrap metal merchant Sims inched up 0.2 per cent after increasing its North American footprint by buying assets from aluminium processor Alumisource for an upfront fee of $22.5 million, plus future performance payments. Sims expects the acquisition will increase its North American non-ferrous sales by 33,000 tonnes from 140,000 tonnes last financial year.
Going down
Afterpay eased 1.6 per cent following a new intraday record yesterday. Toll road operator Transurban fell another 1.6 per cent after yesterday’s Covid-affected half-year result.
Energy companies declined with the end of crude’s nine-session winning run. Woodside shed 0.8 per cent and Santos 0.7 per cent.
A slump in half-year profit sent property group Mirvac down 1.5 per cent to a three-month low. Statutory profit slumped to $396 million from $613 million over the same period in FY20 as the pandemic disrupted building activity.
High-flying Baby Bunting fell further from last week’s record despite strong growth and an increased dividend. The baby goods retailer raised its dividend to 5.8 cents from 4.1 cents last year after reporting a 16.6 per cent increase in sales and a 43.5 per cent jump in statutory net profit. The company’s share price eased 3.8 per cent after more than doubling this year.
Outdoor retailer Kathmandu eased 2 per cent on news sales at its namesake stores continued to be impacted by travel restrictions and lockdowns. A 30 per cent decline at Kathmandu was partly offset by a 21 per cent increase at Rip Curl.
Mortgage insurer Gemworth slid 4.6 per cent after swinging to a full-year loss of $107.6 million. CEO and Managing Director Pauline Blight-Johnson said the result reflected increased reserving for claims resulting from the pandemic.
Crown Resorts dropped 1.7 per cent after confirming Andrew Demetriou had resigned as a director but denying CEO Ken Barton had fallen on his sword. The company said Mr Barton was considering his position after the Bergin inquiry found Crown was unsuitable to hold a casino licence in NSW.
A Reddit-inspired flurry of interest in cannabis stocks withered following heavy declines in the US overnight. New chatroom favourite Tilray tumbled 49.7 per cent in the US in an echo of the rise and fall of GameStop and other “meme stocks”. Here, Cann Global reversed 13.6 per cent, Cann Group 10.9 per cent and Little Green Pharma 8.8 per cent.
Other markets
Japan’s Nikkei fell 0.29 per cent. Markets in China and Hong Kong remained closed for Lunar New Year holidays.
US futures deteriorated. S&P 500 futures dipped six points or almost 0.2 per cent.
Oil retreated for a second session. Brent crude dropped 41 cents or 0.7 per cent to $US60.73 a barrel.
Gold dipped $3.70 or 0.2 per cent to $US1,823.10 an ounce.
The dollar was flat at 77.5 US cents.
What’s hot today and what’s not
Hot today: Investors in meditech Singular Health (ASX:SHG) saw their holdings double in value upon debut this morning. Shares that listed at 20 cents ran as high as 40.5 cents and were lately up 90 per cent at 38 cents. The company specialises in making medical imaging software that operates in 3D and virtual reality. The technology has applications in surgical planning, medical education and patient education.
Not today: Drilling contractor Mitchell Services (ASX:MSV) skidded 20.2 per cent after advising it had terminated a five-year contract with a client over unpaid invoices. The company said it was owed around $8.5 million in outstanding receivables and intended to recognise an impairment of $7.3 million in its second-quarter report. A recovery process had been set in motion to attempt to recover the full amount owing.
