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Australian stocks bounced off a five-week low as positive developments in the struggle against Covid-19 helped offset declines on Wall Street.
The S&P/ASX 200 sank 56 points in the first 20 minutes of trade to its weakest point since August 3 before a rally in bank, mining and health stocks trimmed its fall. By mid-session, the index had was down five points or 0.08 per cent after Victoria recorded its lowest number of new infections in two months and CSL announced plans to manufacture millions of vaccines next year.
What’s driving the market
Soft leads from the US and disappointment at Victoria’s cautious multi-stage roadmap out of lockdown accounted for the early weakness. The S&P 500 shed 0.81 per cent on Friday as a rout in the market-leading megacap tech stocks continued. Business leaders complained over the weekend after the Victorian government announced Melbourne will retain most of its Stage 4 restrictions until at least October 26.
Lockdown-weary Victorians were offered a glimmer of hope in news the state recorded just 41 new cases, the smallest daily tally since June 27. The numbers continued a trend that has seen the daily total decline from 113 to 81, 76, then 63 infections over the last week.
Biotech CSL climbed 0.5 per cent on news it had signed an agreement with the federal government to manufacture 51 million doses of University of Queensland and Oxford University vaccine candidates if either proves successful in clinical trials. The company expects the first doses of a working vaccine to be available by the middle of next year.
A report this morning showed a rebound in job advertising lost momentum last month. Advertising increased just 1.6 per cent in August following gains of 19.1 per cent during July and 41 per cent in June. The monthly tally was 27 per cent lower than the same period last year.
Going up
The heavily-weighted banks and big miners led the turnaround. Rio Tinto climbed 2.4 per cent, Fortescue Metals 2.3 per cent, BHP 1.9 per cent, Westpac 1.6 per cent, ANZ 1.5 per cent, NAB 1.1 per cent and CBA 0.7 per cent. The financial sector hit a three-month low on Friday as the local market skidded 3.1 per cent to its heaviest loss in four months.
Mum and dad favourite Telstra touched an 18-month low this morning before bouncing 0.5 per cent. The telco giant has been under pressure since reporting a 14.4 per cent slump in full-year net profit.
Gold‘s appeal as a haven in times of financial turmoil helped the local sub-sector rise 1.8 per cent. Silver Lake Resources rose 2.9 per cent, Evolution Mining 2.9 per cent and Newcrest 1.1 per cent. Gold bounced $10 or 0.5 per cent this morning to $US1,944.30 an ounce after falling for three sessions.
As in the US, recovery prospects rallied on the promise of economic revival. Webjet put on 4.5 per cent, Seven West Media 4.4 per cent, G8 Education 2 per cent and Flight Centre 1.9 per cent.
Going down
The technology sector led the initial retreat. Afterpay pared its losses but was lately 2.8 per cent in the red.
The five largest industrial companies by market capitalisation all declined, led by a fall of 3 per cent for toll road operator Transurban. Auckland International Airport shed 2.6 per cent, Sydney Airport 2.5 per cent and supply-chain logistics specialist Brambles 1.4 per cent.
The defensive utilities and consumer staples were also weak. Woolworths shed 2.1 per cent, APA Group 1.6 per cent, Coles 0.9 per cent and AGL Energy 0.9 per cent.
Other markets
No clear pattern up in Asia, where China’s Shanghai Composite dipped 0.3 per cent, Hong Kong’s Hang Seng edged up 0.1 per cent and Japan’s Nikkei shed 0.4 per cent. S&P 500 index futures slipped 11 points or 0.3 per cent ahead of tonight’s Labor Day market holiday. Nasdaq futures dived 1 per cent.
Oil started a new week on the back foot. Brent crude slumped 47 cents or 1.1 per cent to $US42.19 a barrel.
The dollar edged up 0.04 per cent to 72.83 US cents.
What’s hot today and what’s not
Hot today: Newcomer Laybuy (ASX:LBY) made a splash upon its listed debut in the increasingly crowded buy now play later space. The New Zealand outfit almost doubled its market capitalisation of $246 million in the first hour of trade. Shares ran from a listing price of $1.41 to $2.30 before paring their gain to 77 cents or 54.6 per cent at $2.18. The company has been running in NZ since 2017 and has footholds in the UK and Australia.
Not today: Disappointment for investors in Pharmaxis (ASX:PXS) after German giant Boehringer Ingelheim dumped the Aussie biotech minnow’s promising anti-inflammatory for an eye condition related to diabetes. Pharmaxis’s share price slumped 14.3 cent after Boehringer terminated an agreement to develop BI 1467335 following a Phase 11a trial. Pharmaxis CEO Gary Phillips said the company would review the trial results to evaluate opportunities.
