The share market fell for the first time in four sessions as a rebound in miners faded, corporate earnings disappointed and several index heavyweights traded ex-dividend.
The S&P/ASX 200 declined 18 points or 0.24 per cent to 7514.
Mining giants Rio Tinto and BHP turned lower. Appen, A2 Milk and Link Administration logged heavy falls after reporting earnings. Coles, Newcrest and JB Hi-Fi retreated as their shares traded without the right to a dividend.
What’s driving the market
A tentative three-session rebound from the market’s worst week since January gave way to further selling as a choppy earnings season delivered more disappointments and a rise in lending rates crimped bond proxies but failed to inspire lenders.
Much of the morning’s excitement was again in the tech sector. A day after WiseTech lit up the boards with a fleeting surge of 59 per cent, Appen seized the spotlight for the wrong reasons. The artificial intelligence specialist dived 18.6 per cent on a guidance downgrade and 55.1 per cent decline in full-year statutory net profit.
The market was already in the doldrums when New South Wales announced 1,029 new local Covid cases, the highest daily tally to date. The index pared its loss after unexpectedly robust business spending soothed fears of a second recession in two years. Private new capital expenditure increased 4.4 per cent last quarter.
“An upside surprise on AU capex for Q2, strength in larger states and in non-mining sectors, gives hope Q2 GDP might record a modest positive,” Alex Joiner, chief economist at IFM Investors, tweeted.
Investors sniffed at higher yields and another round of record closes in the US. The yield on ten-year Australian government bonds firmed more than two basis points. The S&P 500 inched up 0.22 per cent to a new closing high.
A downbeat Asian session weighed on US futures. S&P 500 futures fell nine points or 0.2 per cent. The Asia Dow dipped 0.37 per cent, China’s Shanghai Composite 0.64 per cent, Hong Kong’s Hang Seng 0.68 per cent and Japan’s Nikkei 0.1 per cent.
The launch of a $2 billion share buyback and a stronger-than-expected full-year profit helped lift Woolworths 0.93 per cent. A 5.7 per cent increase in sales boosted earnings 13.7 per cent to $3.663 billion. Net profit improved 22.9 per cent to $1.972 billion.
Qantas rose 2.98 per cent to a four-month high after CEO Alan Joyce said the airline was in a stronger position this year despite an underlying full-year loss of $1.83 billion. Domestic activity between lockdowns helped the airline reduce net debt to $5.9 billion from $6.4 billion in February. Full-year underlying earnings were $410 million, in line with guidance.
Mr Joyce said trading conditions had “frankly been diabolical”, but “we’re in a far better position to manage it than this time last year. We’re able to move quickly when borders open and close. We’re a leaner and more efficient organisation.”
Trans-Tasman rival Air New Zealand eased 1.69 per cent after reporting an NZ$440 million full-year loss.
A Covid-era revenue record in June helped propel Flight Centre 4.16 per cent to a four-month high. The travel agent said trading conditions improved this year as vaccination programs gained momentum and travel restrictions eased. A full-year underlying loss of $507 million was in line with guidance.
A resumption of pre-Covid dividend payments helped cushion private health care company Ramsay from a full-year profit miss. The company will pay a final dividend of $1.03 a share, bringing the full-year payout to $151.5 cents, equivalent to the FY19 dividend. Statutory profit rose 58.1 per cent to $449 million, shy of the $477 million market estimate. The share price improved 1.68 per cent.
Theme park operator Ardent Leisure surged 24.52 per cent after reporting a rebound in full-year earnings as its US operations recovered. Earnings improved by $24.9 million to $30.6 million.
Other winners from this morning’s earning updates included Blackmores +9.07 per cent and Whitehaven Coal +5.41 per cent.
The list of winners was comprehensively outweighed by losers. Link Administration fell 10.97 per cent, IOOF 4.53 per cent, Cromwell Property 0.83 per cent, Costa Group 5.6 per cent, Qube 1.48 per cent, St Barbara 1.9 per cent, AUB Group 5.32 per cent, Starpharma 2.36 per cent, Jumbo Interactive 7.8 per cent and Platinum Asset Management 8.03 per cent.
Tech darling Appen dived 18.6 per cent after reporting a 55.1 per cent decline in statutory net profit to $6.7 million as revenues fell 2 per cent. The AI specialist downgraded its outlook for this year, as well as announcing the acquisition of mobile location business Quadrant.
A2 Milk announced a review of its business strategy after full-year net profit collapsed 79.1 per cent to $80.7 million. Earnings declined 77.6 per cent as the daigou market in China dried up and birth rates fell. The share price slumped 8.75 per cent.
Woolies spin-off Endeavour eased 1.39 per cent after announcing its maiden profit and dividend payment. Full-year group sales increased 9.3 per cent to $11.595 billion. The company, which owns the Dan Murphy’s and BWS brands, will pay a final dividend of seven cents per share.
Several major companies went ex-dividend. Coles declined 1.45 per cent, Newcrest 3.05 per cent and JB Hi-Fi 3.18 per cent.
Oil fell for the first time in three sessions. Brent crude dropped 47 US cents or 0.66 per cent to US$70.81 a barrel.
Gold slipped US$1.20 or 0.07 per cent to US$1,789.80 an ounce.
The dollar trimmed this week’s recovery, falling 0.23 per cent to 72.6 US cents.