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End-of-month profit-taking and negative earnings announcements from ANZ and Beach Energy helped drag the ASX towards a downbeat conclusion to a seventh straight monthly advance.
The S&P/ASX 200 fell 51 points or 0.71 per cent by mid-session, surrendering yesterday’s 14-month closing high.
The retreat pulled the index almost 30 points underwater for the week. However, two weeks of strong gains in the first half of the month ensured nothing short of a dramatic collapse this afternoon would thwart a seventh consecutive winning month. The market has risen on 12 of 13 months since last year’s pandemic-fuelled plunge bottomed out.
What’s driving the market
Energy, healthcare and mining stocks steered the market lower. The defensive utilities sector was the best of the sectors. Transurban, Brambles and Fortescue Metals were the pick of the heavyweights.
The financial sector dropped almost 0.4 per cent after ANZ flagged an $817 million hit to next week’s first-half earnings. Cash profit will be affected by a mix of write-downs, customer remediation charges, restructuring charges and a previously announced class action settlement. Shares in the bank reversed early weakness to inch up 0.02 per cent. CBA shed 0.9 per cent. Westpac lost 0.4 per cent. NAB gained 0.04 per cent.
Beach Energy lost a fifth of its market value after a review forced the company to downgrade its oil and gas reserves and scrap its five-year outlook. The review was triggered by unexpectedly sharp declines in production rates. The company now expects production from its Western Flank assets to be four – five million barrels of oil equivalent lower than previous estimates. The share price dived 20.54 per cent to a five-month low.
Positive overnight leads from the US were overshadowed by a negative reaction to this morning’s after-market US profit reports. S&P 500 futures slid 11 points or 0.27 per cent despite a well-received quarterly from Amazon. The retailer’s shares climbed 2.38 per cent in extended trade. Social media giant Twitter tanked 11.51 per cent after missing subscriber targets.
Overnight, the S&P 500 climbed 0.68 per cent to a record close after GDP data showed the economy was accelerating and fewer people were looking for work. The Dow put on 0.71 per cent. The Nasdaq Composite edged up 0.22 per cent.
“Overall, we can see US economic growth moving closer to its pre-pandemic stage on the back of resurgence in household spending. Notably, the two rounds of US stimulus checks and inexpensive borrowing rates have been able to supercharge household spending, as indicated by an annualised 10.7% gain in the personal spending,” Kalkine Group CEO Kunal Sawhney said.
“In addition to the upbeat first quarter GDP numbers, the recent decline in the US unemployment claims to their lowest level since the COVID-19 pandemic took hold confirms a rapidly improving economy… With policy support staying intact, continued progress in the vaccination program and strengthening job market, we may see the economic output to return to pre-pandemic level sooner than anticipated.”
Going up
Mesoblast bounced 7.92 per cent on news it retains hopes for its experimental treatment for Covid despite a trial setback. The company plans to meet with the US Food and Drug Administration to discuss potential applications.
“The mortality benefit observed with remestemcel-L in ventilator-dependent patients younger than 65, particularly in combination with dexamethasone, has the potential to change the treatment regimen in this critical patient population,” Dr Fred Grossman, the firm’s Chief Medical Officer, said. “As cases continue to surge in younger patients across the US, we plan to meet with the FDA to discuss next steps in the regulatory process.”
A 7 per cent increase in commodity revenue last quarter thanks to rising oil and LNG prices helped lift Origin Energy shares 1.22 per cent. The price boost and cost savings partly offset a 4 per cent decline in production due to maintenance.
Cimic inched up 0.05 per cent after reporting a quarterly net profit of $100 million and reaffirming full-year profit guidance.
Going down
Santos slipped 0.28 per cent during a generally downbeat session for oil companies after selling a 25 per cent interest in Bayu-Undan and Darwin LNG to its Korean partner SK E&S. The sale secured US$186 million. Santos remains the operator with a stake of 43.4 per cent.
Sleep apnoea specialist ResMed slumped 4.74 per cent on news the company has set aside $255 million to settle a dispute with the Tax Office. The provision contributed to a net loss of $78.5 million for the quarter. Net income increased 1 per cent to $190.4 million.
Most of the major miners turned lower despite a flat session in iron ore and copper’s first push above US$10,000 a tonne in a decade. BHP declined 1.44 per cent. Rio Tinto fell 1.23 per cent. Fortescue Metals added 0.13 per cent.
Afterpay pared two days of gains, falling 1.75 per cent. Newcrest dropped 1.44 per cent following a third straight drop in gold. Woodside shed 1.25 per cent, Woolworths 1.43 per cent and CSL 0.89 per cent.
AMP dropped 2.64 per cent despite the beleaguered wealth manager’s best attempts to reassure investors its turnaround strategy had made “substantial progress”.
“We have sold our life insurance business, renovated our core banking platform, made meaningful progress on product simplification, are close to completing our client remediation program, taken significant steps on our culture transformation, embarked on reshaping our advice network and grown our North platform,” Chair Debra Hazelton told today’s virtual AGM.
Other markets
A dour morning on Asian markets saw the Asia Dow fall 0.75 per cent. China’s Shanghai Composite gave up 0.74 per cent, Hong Kong’s Hang Seng 1.54 per cent and Japan’s Nikkei 0.53 per cent.
Oil trimmed a three-day rally. Brent crude declined 29 cents or 0.43 per cent to US$67.76 a barrel. Gold faded 80 cents or 0.05 per cent to US$1,767.50 an ounce.
The dollar eased 0.06 per cent to 77.72 US cents.
