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A wave of profit-taking in the buoyant health sector and earnings disappointments from energy heavyweights Santos and Origin helped drag the share market off a five-month high.
The S&P/ASX 200 turned negative for the week, partly reversing two days of gains that lifted the local market to its highest close since the second week of the February-March pandemic meltdown.
The index fell 70 points or 1.1 per cent by mid-session as gains in tech stocks, REITs and consumer stocks were outweighed by declines in energy, health, mining and the banks.
Wall Street
The decline followed a losing session in the US. The S&P 500 slumped 15 points or 0.44 per cent overnight after the Federal Reserve warned of considerable uncertainties as the economy struggles to recover from the effects of coronavirus lockdowns.
S&P 500 index futures extended the market’s late retreat, falling 27 points or 0.8 per cent this morning.
Moving the market
The energy sector led the retreat, sliding 3.2 per cent as Origin Energy sank 6 per cent and Santos 4.5 per cent. Origin shares slumped after the gas and electricity retailer reported a collapse in full-year profits from $1.211 billion to $83 million. Santos declared a half-year loss of $401 million after writing down the value of its assets by $1.1 billion to reflect the impact of the pandemic on crude and natural gas. Woodside eased 2.4 percent.
The health sector had enjoyed a sparkling week due to well-received results from CSL and Cochlear, but succumbed to selling after yesterday’s four-month peak. CSL retraced 3.9 per cent, Cochlear 1.1 per cent and Ramsay Health Care 1.7 per cent. Sonic bucked the trend, rising 0.7 per cent to an all-time high as COVID testing helped the company book a full-year profit of $528 million.
A fleeting revival in the banks after ANZ’s dividend announcement yesterday gave way to more selling. The big four fell between 1.3 and 2.1 per cent.
Mining heavyweight BHP slid 1.1 per cent towards a fourth straight loss. Rio Tinto dipped 0.5 per cent and Newcrest 2.2 per cent after a horror session for gold. Gold for December delivery was lately down $23.80 or 1.2 per cent at $US1,946.50 an ounce after losing 2.1 per cent overnight.
Afterpay jumped 8.4 per cent to a fresh record following an after-market trading update yesterday. Nearmap bounced 4.6 per cent.
Other earnings
Overseas students placement provider IDP Education was the pick of companies reporting earnings, soaring 27.9 per cent to a five-month peak after surprising the market with a 3 per cent increase in full-year net profit despite the pandemic. Other winners included Charter Hall Group +4.6 per cent, Coca-Cola Amatil +3.2 per cent, Star Entertainment +3 per cent, Growthpoint Property +2.9 per cent, ASX +2 per cent, Southern Cross Media +1.5 per cent, Waypoint REIT+1.5 per cent and Mirvac +1.2 per cent.
Qantas declined 1.2 per cent after declaring a statutory loss of $2.7 billion during what CEO Alan Joyce called “the worst trading conditions in our 100-year history”. Wesfarmers eased 0.1 per cent from record levels on news of a profit dent from a $500 million writedown of its Target chain of stores.
Other notable losses included Webjet -12.2 per cent (more below), IPH -8.5 per cent, Iress -4.9 per cent, Medibank Private -3.7 per cent, Pro Medicus -3.3 per cent, South32 -1.6 per cent and Domain Holdings -0.8 per cent.
Other markets
Asian markets followed Wall Street lower. China’s Shanghai Composite dropped 1 per cent, Hong Kong’s Hang Seng 1.9 per cent and Japan’s Nikkei 0.7 per cent.
Oil declined with US index futures despite an OPEC decision to extend production caps. Brent crude skidded 39 cents or 0.9 per cent to $US44.98 a barrel.
The dollar fell 0.2 per cent to 71.68 US cents.
What’s hot today and what’s not:
Hot today: A pivot towards online services helped student placement facilitator IDP Education (ASX:IEL) spring one of the surprises of this earnings season. The company increased its full-year net profit after tax by 3 per cent to $70.4 million despite a freeze on international travel. CEO and Managing Director Andrew Barkla credited the result to strong capital management and innovation. The share price jumped 27.9 per cent to its strongest level since the start of the pandemic.
Not today: Webjet (ASX:WEB) was the index’s biggest loser after swinging to a $143.6 million loss as business dried up in the second half of the financial year. A first-half profit of $9 million proved a flimsy buffer against a second-half hit of $152.5 million as the company scrambled to reduce costs. The share price slumped 12.2 per cent.
