A string of profit warnings and a looming deadline for higher trade tariffs kept a lid on a third day of gains on the ASX.
The ASX 200 struggled to build on a recovery that began last Thursday, rising just 14 points or 0.2 per cent to 6721 this morning despite strong overseas leads. Wall Street surged on Friday as strong November jobs figures chased away recession concerns. The Dow jumped 1.22 per cent to its biggest gain in two months.
Estia Health, McMillan Shakespeare and Viva Energy downgraded earnings. Also weighing on sentiment was a slump in US index futures as the weekend passed without significant news on trade talks. The US is scheduled to increase tariffs on a range of Chinese imports on Sunday unless negotiations yield sufficient progress towards a phase-one trade deal. S&P 500 futures slipped six points or 0.2 per cent.
Aged care provider Estia Health tumbled 6.8 per cent to an eight-month low on news of an earnings hit from a drop in occupancy rates. The company said it expected full-year earnings before interest and tax to decline to $78 - $82 million from $94 million last year.
Petrol retailer Viva Energy blamed volatility in oil prices for a slump in underlying net profit after tax to $135 - $165 million from $229 million last year. Shares fell 5.6 per cent. Milk company A2 sank 3.6 per cent on news CEO and Managing Director Jayne Hrdlicka was standing down.
Energy was the pick of the sectors after crude was boosted by deeper OPEC production cuts. Beach Energy put on 5.6 per cent, Cooper Energy 3.7 per cent, Santos 1.9 per cent and Woodside 2 per cent.
The defensive utilities and telecommunication sectors also fared well as APA Group advanced 1.6 per cent, Telstra 0.8 per cent and AGL 0.7 per cent. BHP and Rio Tinto lifted 1.4 per cent. The banks were mixed, with CBA once again outperforming.
At the speculative end of the market, miner Legend surged 86 per cent after releasing much-anticipated results from drilling in the Fraser Range in WA. 'Nearology' plays that had risen strongly in anticipation of the results fell back after rumours of a Nova-scale hit proved overstated at this stage. Galileo slipped 25 per cent, and Fraser Range Metals 18.5 per cent.
Gains on Asian markets were muted. China's Shanghai Composite and Hong Kong's Hang Seng added 0.1 per cent and Japan's Nikkei 0.3 per cent.
Brent crude futures pared Friday's $1 rally, easing 21 cents or 0.3 per cent this morning to $US64.18 a barrel. Gold dipped 50 cents or less than 0.1 per cent to $US1,464.60 an ounce.
The dollar was steady at 68.32 US cents.
What's hot today and what's not:
Hot today: food prices around the globe hit a two-year high last month as African Swine Fever triggered a surge in meat prices, according to a United Nations report. Local biotech Zoono cashed in this morning on the interest in defences against a virus that has wiped out a quarter of the world's pigs. Zoono said its microbe shield had proven effective in counteracting the virus, and attracted considerable interest at a Chinese conference last month. Shares jumped 6 cents or 25 per cent to 30 cents.
Not today: fleet and asset manager McMillan Shakespeare was the index's worst performer after warning of weak trading conditions in key markets. The company said conditions in the UK, Australia and New Zealand were "challenging" and it now expected full-year underlying net profit after tax to be in the region $83 - $87 million, a decrease on last year's $88.7 million. Shares skidded 13 per cent to their lowest level in almost four months.