Shares drifted further from record levels as rate-sensitive sectors adjusted to a possible stay in the cutting cycle.
The ASX 200 faded 14 points or 0.2 per cent to 6819 by mid-session as the domestic outlook overshadowed another record night on Wall Street. US stocks closed at fresh highs overnight, the S&P 500 rising 14 points or 0.45 per cent.
The mood back home was dictated by yesterday’s surprise drop in unemployment, which lifted the dollar and bond yields and slashed the likelihood that the Reserve Bank will cut its key lending rate when it next sits in February. The unemployment rate dropped to 5.2 per cent last month from 5.3 per cent in October as the economy added 39,900 new jobs – three times as many as economists expected.
The odds on a rate cut slumped from above 60 per cent to nearer 40 per cent, according to interbank futures. The dollar jumped more than half a cent, lately buying 68.88 US cents.
Today’s retreat was led by consumer stocks that traditionally benefit from lower rates. Supermarkets Woolworths and Coles hit all-time highs last month. This morning Woolworths fell 1.7 per cent and Coles 0.3 per cent. Retail conglomerate Wesfarmers shed 0.8 per cent, Tabcorp 0.8 per cent and Flight Centre 0.5 per cent.
Sentiment was dented by a string of downbeat company updates. Regis Healthcare slumped 17 per cent after the aged care provider cut its net profit outlook by more than a quarter because of a slump in occupancy rates following the Royal Commission. Internet lottery business Jumbo Interactive sagged 13.8 per cent to an eight-month low after first-half performance fell short of investors’ expectations. Smash repairer AMA Group tumbled 18.6 per cent after acknowledging the impact of drought on panel repair volumes and a decline in new car sales on its profit forecast.
The index’s best performers were remote communications group Speedcast, up 6 per cent, and graphite miner Syrah Resources, up 4.8 per cent. Gold stocks outperformed after the precious metal hit a two-week peak following the impeachment of US President Donald Trump. Northern Star gained 2.3 per cent, Evolution Mining 1.9 per cent and Resolute 1.8 per cent.
The big miners were mixed: BHP dipped 0.5 per cent, while Rio Tinto rose 0.6 per cent. The top four banks all fell between 0.2 and 0.5 per cent.
A downbeat morning on Asian markets saw China’s Shanghai Composite per cent open flat,
Hong Kong’s Hang Seng slide 0.2 per cent and Japan’s Nikkei off 0.4 per cent.
S&P 500 index futures eased a point or less than 0.1 per cent.
Brent crude futures ticked up a cent this morning to $US66.55 a barrel. Gold declined $2.10 or more than 0.1 per cent to $US1,482.30 an ounce.
What’s hot today and what’s not:
Hot today: healthcare junior Cogstate stood out on a morning of disappointing corporate updates. Shares jumped 33.3 per cent on news that the company executed a record number of clinical trials sales contracts since July 1. Sales of $26.8 million made this a record first-half. CEO Brad O’Connor said the half-year result exceeded his expectations and represented a strong turnaround from a disappointing 2019 financial year.
Not today: investors in Lendlease expressed their disappointment in the sale price for the company’s engineering business. The share price slumped 3.9 per cent to its weakest level in two months after the company announced it will sell the unit to Spanish giant Acciona for $180 million. The price was far short of the $300 million predicted by UBS, and importantly excluded several “problem” projects, including the NorthConnex and Kingsford Smith Drive projects in Sydney and the Melbourne Metro project.