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A week of daily market reversals continued with a modest decline as investors sifted through a swag of earnings updates and weighed soft leads from the US.
The S&P/ASX 200 traded both sides of break-even before reaching mid-session seven points or 0.1 per cent weaker.
Gains in mining stocks, Telstra and Commonwealth Bank were narrowly outweighed by declines in Transurban, Afterpay, the supermarkets and the other banks.
What’s driving the market
The February bull run has lost momentum this week as global equity markets consolidate gains and await fresh catalysts. Overnight, the S&P 500 slipped 0.03 per cent, a second straight minor loss.
“Markets have been fairly subdued on the back of soft inflation numbers in the US,” NAB Director of Economics Tapas Strickland said. “US core CPI [consumer price inflation] missed expectations overnight, suggesting the potential for a lift in inflation remains theoretical and very much contingent on further stimulus being approved,” he added.
US futures turned lower this morning. S&P 500 futures eased seven points or 0.2 per cent.
The spotlight down under was very much on earnings. The market handed bouquets to Newcrest, Telstra and AGL and lobbed brickbats at AMP, Transurban and Magellan (more below). Nearmap was blindsided by a shortseller attack. AMP lost a suitor.
Trading volumes across the wider region were depressed by the start of Lunar New Year holidays in Asia. Chinese markets will remain closed until next Thursday.
Going up
Pre-Lunar New Year holiday bumps in iron ore, copper and crude ensured the domestic mining sector was well supported. Rio Tinto rose 1.7 per cent, BHP 1 per cent and Fortescue Metals 0.2 per cent. Woodside Petroleum added 0.1 per cent.
Miner Newcrest was the pick of the heavyweights, jumping 5.5 per cent as surging commodity prices helped the miner more than double statutory half-year profit. Full-year gold production was expected to be towards the upper end of previous guidance. The dividend was unchanged at 15 cents per share.
Telstra climbed 2.5 per cent to a six-month peak after CEO Andrew Penn declared the telecom giant was at a turning point after years of disappointing returns. Penn said earnings would start to grow again after a 14.7 per cent decline last half to $4.1 billion. The board declared a fully-franked interim dividend of eight cents, with another eight cents at the end of the financial year.
“After a decade of disruption following the creation of the nbn, and with its rollout now declared complete, we can clearly see the path to underlying growth ahead of us,” he said.
AGL Energy edged up 1.4 per cent after reporting a $2.287 billion statutory half-year loss. Shares fell to their lowest level in almost 13 years this week after the company pre-empted the grim result with a warning about charges and weak wholesale electricity and gas prices.
A possible breakthrough in treating chronic back pain lifted Mesoblast 1.6 per cent. The inflammatory disease specialist said Phase 3 trials showed a single injection of its experimental treatment could provide relief to patients with degenerative disc disease for at least two years.
Integrated services provider Downer EDI rallied 2.3 per cent on news it will resume paying dividends despite a 17.3 per cent slump in statutory net profit.
A day after increasing its dividend, Commonwealth Bank bucked a downtrend in financials, rising 0.6 per cent. Macquarie Group eased 0.7 per cent, NAB 0.5 per cent, ANZ 0.4 per cent and Westpac 0.2 per cent. Property giant Goodman Group gained 0.7 per cent and CSL 0.1 per cent.
Going down
Troubled wealth manager AMP dived 9.4 per cent to $1.39 after would-be suitor Ares Management Corporation walked away. The US investment manager told AMP it would not proceed with a non-binding offer of $1.85 per share. The Australian firm reported an 8 per cent decline in assets under management in the first half as many Australians drew down on their super.
Covid-affected traffic volumes cast a cloud over Transurban‘s half-year result. Average daily traffic on the operator’s toll roads slumped 17.8 per cent. The company declared a statutory loss of $448 million and a dividend of 15 cents. The share price declined 1.5 per cent.
Shopping centre operator Unibail-Rodamco-Westfield sank 2.4 per cent after warning it does not expect to pay a dividend until 2023. Investment manager Magellan dropped 3.8 per cent despite a 9 per cent increase in funds under management, 3 per cent rise in net profit and a 5 per cent hike in the dividend to 97.1 cents.
Market operator ASX dipped 1.7 per cent after record-low interest rates helped drag net profit down 3.4 per cent to $241.8 million.
Beyond the earnings space, the biggest weights at the top end of the market were Brambles -2 per cent, Afterpay -1.1 per cent and Aristocrat Leisure -0.9 per cent. Woolworths slipped 0.7 per cent, Wesfarmers 0.3 per cent and Coles 0.4 per cent.
Aerial mapping firm Nearmap dived 7.3 per cent before entering a trading halt following an attack by short-seller J Capital. The US company accused Nearmap of failing to crack the US market but “forgetting” to tell investors. Nearmap halted trade to respond to the allegations.
Other markets
Oil‘s longest winning run in 13 months came under pressure. Brent crude dropped 49 cents or 0.8 per cent to $US60.98 a barrel. The global benchmark had advanced for nine straight sessions coming into today.
Gold faded $3.50 or 0.2 per cent to $US1,839.20 an ounce.
The dollar eased 0.1 per cent to 77.16 US cents.
What’s hot today and what’s not
Hot today: Shares in The Market Herald (ASX:TMH), publisher of this website, briefly doubled in value after the company updated investors on the launch of its streaming network. The company said the Price Sensitive show was fast becoming one of the most streamed Australian business bulletins, sometimes reaching 500,000 streams. The platform sold $1.1 million in annualised advertising and received $290,000 during the pilot period. The share price ran from 42 cents to 84 cents and was last up 78.6 per cent at 75 cents.
Not today: Telstra reseller Vita Group (ASX:VTG) tumbled after Telstra announced it will take control of its retail store network. The licensing agreement with Vita will terminate in June 2025. Vita CEO Maxine Horne said the company had growth opportunities in the skin health and wellness space. “The remaining period of the Telstra licence arrangement will provide cashflow as we continue to grow the Artisan brand,” she said. The share price slumped 27.1 per cent.
