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A stubborn ASX kept alive hopes of the longest winning run of the year, declining a modest 0.1 per cent despite negative leads from Wall Street.
Gains in health giant CSL, supermarkets and technology stocks helped cap the S&P/ASX 200‘s mid-session loss at seven points or 0.1 per cent.
What’s driving the market
The benchmark Australian index had risen for seven straight sessions coming into today, averaging a 1 per cent advance each day. An eighth gain would seal the best run of 2020, but the market faced strong headwinds after Wall Street succumbed to a toxic mix of earnings disappointments and delays in coronavirus vaccine trials.
The S&P 500 slipped 0.63 per cent to its first loss in five sessions. The Dow shed 0.55 per cent and the Nasdaq Composite 0.1 per cent.
“A combination of underwhelming company specific news, pausing of Covid-19 trials and no backing down in the US stimulus impasse have contributed to a souring in sentiment over the past 24 hours,” NAB Currency Strategist Rodrigo Catril said.
The ASX 200 fell 21 points in the first hour, then slowly clawed back towards break-even, briefly turning positive just after 11 am EST.
Going up
An upgraded profit outlook from the nation’s largest listed healthcare company helped cushion the market from a deeper loss. CSL shares climbed 2 per cent after the company raised the lower end of its guidance for this year from zero growth to 3 per cent and held the top end target at 8 per cent. Ramsay Health Care rose 0.3 per cent after revising a deal with England’s National Health Service to allow the company to reclaim capacity for private patients and routine NHS procedures.
Afterpay climbed 2.7 per cent to a new high after the financial watchdog AUSTRAC announced it would take no further action following an external audit into the buy now pay later firm’s compliance with anti-money laundering legislation. Payments solutions provider EML surged 10.1 per cent as shareholders digested an upbeat investor presentation highlighting the company’s project pipeline.
On a morning when records tumbled, Xero rose 1.7 per cent to an all-time high. NextDC inched 0.7 per cent to a record. Building products supplier James Hardie climbed 2.3 per cent to a historic high after raising its post-tax profit guidance to US$380 – US$420 million for the year.
Shareholders in Bank of Queensland looked beyond the effects of Covid, lifting the share price 3 per cent to a four-month peak despite news of a 30 per cent slump in cash earnings and 61 per cent dive in statutory net profit. Jeweller Michael Hill encouraged hopes of a retail revival with news same-store sales increased 7.3 per cent last quarter over the same period last year. The share price responded with a rise of 9.6 per cent.
Supermarkets Woolworths and Coles rose 1.2 per cent and 1.4 per cent, respectively. IGA wholesaler Metcash put on 1.2 per cent.
Going down
Energy stocks ignored a rebound in oil overnight after analysts downplayed the move, citing the end of a strike in Norway, the resumption of production in Libya and the passing of a hurricane in the Gulf of Mexico as bearish price forces. Woodside slid 1.8 per cent, Santos 0.5 per cent and Origin 0.8 per cent.
The financial sector retreated from its highest level in two months. Westpac shed 1.6 per cent, NAB 1.4 per cent, CBA 0.8 per cent and ANZ 0.6 per cent.
Travel agent Flight Centre dropped 5.7 per cent following a broker downgrade from Credit Suisse.
Other markets
US index futures crept higher as traders looked ahead to quarterly earnings updates tonight from Bank of America, Goldman Sachs, Wells Fargo and UnitedHealth. S&P 500 index futures rose two points or 0.1 per cent.
A negative morning on Asian markets saw China’s Shanghai Composite decline 0.3 per cent, Hong Kong’s Hang Seng 0.1 per cent and Japan’s Nikkei 0.3 per cent.
Brent crude skidded ten cents or 0.2 per cent to $US42.35 a barrel. Gold faded $5 or 0.3 per cent to $US1,889.60 an ounce.
The dollar was dead flat at 71.64 US cents.
What’s hot today and what’s not:
Hot today: The commercial possibilities of seaweed as a “superfood” inspired investors to more than double the market valuation of a traditional medicines firm. Stemcell (ASX:SCU) announced it had signed a joint venture with aquaculture specialist Blue Aqua International to cultivate and farm sea grapes – an edible seaweed popular in the Philippines. CEO Philip Gu said, “SCU is honoured to be able to partner with Blue Aqua in making Sea Grapes available to the growing population on a commercial scale, and with the strong belief that Sea Grapes will become part of a recognised balanced diet mix.” The company’s share price rose as high as 3.5 cents and was lately up 100 per cent at 2.4 cents.
Not today: A decline in Chinese demand for coal helped send shares in rail freight operator Aurizon (ASX:AZJ) down 2.8 per cent to their lowest level since March. Rail volumes shrank 2 per cent last quarter. The company said, “This is in line with expectations of a softer first half of the financial year with recessionary conditions from COVID-19 impacting coal demand in addition to China curtailing aggregate coal import volume.” Conditions are expected to improve next year.
