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A weary-looking ASX marked time following a fortnight of strong gains as a weaker dollar and a positive rates outlook helped offset negative leads from overseas.
The S&P/ASX 200 slipped nine points or 0.1 per cent to 6201 by mid-session, avoiding the heavy losses seen on European markets after the UK and France imposed new lockdowns.
What’s driving the market
Often derided for its slavish response to Wall Street price action, the ASX has shown an independent streak over the last two weeks as government stimulus, easing Covid numbers in Victoria and a positive domestic rates outlook outweighed overseas concerns. Reserve Bank Governor Philip Lowe yesterday signalled a possible rate cut next month and the potential for quantitative easing (QE) in the longer term.
“Lowe reiterated it was possible to cut the cash rate to 0.10% from 0.25% and that the Board was evaluating the case for outright QE in the 5-10 year space,” NAB Currency Strategist Rodrigo Catril said this morning. “We expect both of these policy measures to be adopted next month.”
The benchmark index hung on above the psychologically-significant 6200 level it closed above yesterday for the first time in seven months. A close above that level would give investors confidence there is more upside potential following a surge that has lifted the index more than 400 points or seven per cent in two weeks.
The market shrugged off minor falls in the US following Europe’s worst session in three weeks. The S&P 500 lost 0.15 per cent. The Dow closed 20 points in the red after being down more than 300 points. The pan-European Stoxx 600 shed 2.08 per cent.
Going up
A mixed market saw declines in REITs, health stocks and miners partly offset by gains in banks and the consumer discretionary sector. Macquarie Group outpaced the big four, rising 1.6 per cent. ANZ, CBA and NAB gained 0.5 per cent. Westpac fell less than 0.1 per cent.
Wesfarmers climbed 0.7 per cent after the retail conglomerate left the door open to government support. A spokesperson told Fairfax the company would “look carefully” at the government’s JobMaker program, which incentivises employers to hire.
Shopping centre operator Unibail-Rodamco-Westfield was the index’s best performer, surging 12.4 per cent after a group of rebel shareholders opposed the property group’s plan to issue 3.5 billion euros worth of new shares. Other notable moves included: GUD Holdings +6.4 per cent, Medibank +4 per cent and Super Retail Group +3.7 per cent.
Specialist retailer Beacon Lighting Group soared 12 per cent to its highest level since February 2018 after reporting a 24.3 per cent increase in sales over the last quarter despite the Melbourne lockdown. Net profit after tax almost quadrupled from $2.2 million to $8.4 million.
US index futures rebounded. S&P 500 index futures rose 11 points or 0.3 per cent.
Going down
At the big end of the market, health giant CSL slid 0.4 per cent, toll road operator Transurban 1.4 per cent and miner BHP 0.8 per cent. Rio Tinto shed 0.9 per cent after unveiling a 5 per cent decline in iron ore shipments last quarter due to planned maintenance. The company reaffirmed its production guidance.
Property groups were the biggest down-pressure. Atlas Arteria fell 3.9 per cent, Mirvac 3.7 per cent, Scentre Group 3.1 per cent and Vicinity Centres 3 per cent.
The energy sector came under mild pressure. Oil Search retreated 2 per cent, Beach Energy 1.8 per cent, Santos 1.5 per cent and Woodside 0.5 per cent.
Other markets
Asian markets took the overnight turmoil in their stride. China’s Shanghai Composite rose 0.2 per cent and Hong Kong’s Hang Seng 0.3 per cent. Japan’s Nikkei traded just below break-even.
Gold extended last night’s late recovery, rising $5.40 or 0.3 per cent to $US1,914.30 an ounce. Brent crude dipped 21 cents or 0.5 per cent to $US42.95 a barrel.
The dollar extended overnight weakness, falling 0.12 per cent to 70.79 US cents.
What’s hot today and what’s not:
Hot today: Australia’s fifth-largest provider of National Broadband Network services doubled its market value upon listing this morning. Shares in Aussie Broadband Limited (ASX:ABB) listed at $1 and rose as high as $2.22 before falling back to $1.91. The company offers NBN bundles and has connected around a quarter of a million residential and business customers. ABB forecasts pro-forma revenue will reach $338.1 million this financial year.
Not today: The long wait for an opportunity to trade brought little joy to shareholders in skin products manufacturer Skin Elements (ASX:SKN). Shares suspended since May more than halved from 8 cents to 3.3 cents after the ASX reinstated the company following replies to a long list of queries from the market operator. High hopes for a sales bonanza in hand sanitiser were dashed by news the company sold $70,916 worth of product last quarter.
