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The share market erased yesterday’s gains as the dollar hit a three-year peak and the tech sector a six-week low following a volatile night on Wall Street.

The S&P/ASX 200 slumped 63 points or 0.9 per cent by mid-session. Slender gains in Woolworths, NAB and Brambles were outweighed by declines in tech stocks, miners and the rest of the banks.

What’s driving the market

A global rotation out of last year’s best performing sectors into companies with more recovery potential continued to cause ructions overnight. The Nasdaq Composite dived 3.9 per cent before a dovish outlook from Federal Reserve Chair Jerome Powell helped fuel a partial recovery. The tech-heavy index ended just 0.5 per cent lower. The S&P 500 and Dow both finished narrowly ahead.

Some of that volatility infected the Australian tech sector. Afterpay was the worst of the market heavyweights, falling 3.4 per cent. Fellow BNPL player Humm tanked 15.9 per cent after withholding its interim dividend to fund international expansion. Appen dived 10.6 per cent after missing earnings guidance.

Sydney Airport and Nine Entertainment were among the morning’s best performers as investors chased potential recovery stories. Both companies reported this morning (more below).

“2020 was all about finding potentially attractive investment themes in virus-immune resilient sectors. 2021 looks to be a year of turnaround,” Kalkine Group CEO Kunal Sawhney said.

“High-valuation tech stocks appear to be under the hammer amid the rise in global bond yields and steaming inflation expectations,” he added. The “crisis’ biggest loser – travel – is witnessing glimmers of hope on revival front. Undervalued travel stocks are garnering investors’ attention amid vaccine-fuelled economic recovery hopes.”

The market’s losses accelerated as the dollar pushed to a three-year peak. The Aussie was last up 0.42 per cent at 79.45 US cents. A strong dollar is seen as broadly negative for Australia’s largely export-driven economy.

Going up

Woolworths rose 1.1 per cent after reporting an 8 per cent increase in food sales over the first seven weeks of this year. The supermarket expected sales to fade until June, but the drop would be partly offset by a decline in Covid-related costs. Rival Coles eased 0.1 per cent.

Gains were muted at the top end of the market. Brambles added 0.3 per cent. NAB was the best of the banks, rising 0.2 per cent. CBA slid 0.4 per cent, ANZ 0.5 per cent and Westpac 0.8 per cent.

A recovery in ad markets helped Nine Entertainment lift half-year net profit 69 per cent to $178 million. Highlights included a $23 million improvement in earnings at Stan and 26 per cent growth in digital subscriptions and licensing revenue. Shares jumped 8.2 per cent.

A “cautiously optimistic” outlook helped Sydney Airport rally 1.9 per cent despite a predictably grim full-year result. A 74.7 per cent plunge in traffic last year dragged the airport to a post-tax loss of $107.5 million.

CEO Geoff Culbert said, “We are cautiously optimistic that 2021 will see the industry begin to recover.”

WiseTech climbed 0.9 per cent after raising its earnings guidance to reflect a strong first half. The software firm expects revenue growth of 9 – 19 per cent.

Record international sales helped Blackmores increase revenue by 4 per cent despite a downturn in its Australian business. While the company’s ANZ business declined 10 per cent in the first half, international earnings jumped 61 per cent. The share price responded with a surge of 9.3 per cent.

IDP Education was the index’s best performer, flying up 9.4 per cent. The student placement service flagged a recovery this year after reporting a 29 per cent downturn in half-year revenue.  

Going down

Mining giants BHP and Rio Tinto eased from yesterday’s record closes following a downtick in iron ore. BHP dropped 2.5 per cent and Rio 1.9 per cent. Fortescue Metals shed 1.1 per cent. Gold miner Newcrest fell 0.9 per cent.

Elsewhere at the top end, Goodman Group sank 2.6 per cent, Macquarie 1.4 per cent, Wesfarmers 1.2 per cent and CSL 0.5 per cent.

A tough week for investors in tech darling Appen continued as the data company missed its full-year guidance. An 8 per cent rise in underlying pre-tax earnings to $101.8 million fell short of the $106 – $109 million range flagged in December. Shares dived 10.6 per cent to their weakest level since March.

Scentre Group fell 1.6 per cent despite riding out the pandemic with a $763.4 million full-year operating profit. The Westfield operator said cashflow improved by 95.7 per cent in the second half.

Medibank dipped 2.8 per cent as the departure of CEO Craig Drummond took some of the shine off a 26.8 per cent lift in half-year net profit. Drummond has helmed the health insurer since 2016.

Telstra fell 3.7 per cent and AGL Energy 4.2 per cent as they traded without their dividends.

Other markets

A subdued morning on Asian markets saw China’s Shanghai Composite ahead 0.1 per cent, Hong Kong’s Hang Seng down 0.13 per cent and Japan’s Nikkei down 0.39 per cent.

US futures swung higher as the session advanced. S&P 500 futures climbed three points or 0.1 per cent.

Oil reversed skinny overnight gains. Brent crude retreated 39 cents or 0.6 per cent to $US64.09 a barrel. Gold edged up $3.30 or 0.2 per cent to $US1,809.20 an ounce.

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