Utilities and energy firms lift ASX; Kathmandu drops

Welcome to your five-minute recap of the trading day.

The numbers

Utilities firms and energy companies helped to turn the Australian sharemarket around from its early losses on Friday, following a negative lead from Wall Street overnight.

The S&P/ASX 200 Index rose 26.6 points, or 0.3 per cent, to 7796.0, with eight of the 11 industry sectors advancing.

Kathmandu feels revenue chill. Credit:

The lifters

The utilities sector (up 1.9 per cent) was the strongest on the local bourse as Mercury NZ (up 4.1 per cent) and Origin (up 3.3 per cent) bolstered the sector’s performance. The energy sector rose 1.1 per cent, with coal miners Yancoal (up 2.3 per cent) and Whitehaven (up 2.6 per cent) both climbing.

Shares of hearing implants maker Cochlear bounced back after slipping 4.8 per cent on Thursday. They rose 3.2 per cent, propelling the healthcare sector to a gain of 1 per cent.

Gold miner Evolution (up 4.2 per cent) was the biggest large-cap advancer, while REA Group (up 3.2 per cent) and ProMedicus (up 2.9 per cent) were also among the best megacap performers.

The laggards

Consumer discretionary (down 0.4 per cent) was the worst-performing sector as Wesfarmers shares lost 1 per cent, Lottery Corp. shed 1 per cent and JB Hi-Fi slid 0.6 per cent. Industrials were also weaker as infrastructure investment firm Infratil’s shares lost 2.2 per cent, Seven Group dropped 1.9 per cent and Computershare slid 1.4 per cent.

Miners were among the worst megacap performers, with Mineral Resources shares down 7 per cent, Pilbara Minerals down 2.8 per cent and iron ore heavyweight Fortescue down 0.9 per cent.

Shares of KMD Brands – owner of Kathmandu, Rip Curl and footwear brand Oboz – tumbled 7.7 per cent after the company posted an 8.4 per cent dip in sales across its brands between February 24 and May 24.

Mosaic Group, which operates budget clothing brands Noni B, Millers, Katies and Rivers, saw its shares crash as much as 20 per cent intraday after the company said it expects to post a marginal loss for the 2023-2024 financial year. The shares ended the session 12 per cent lower.

Shares in Mexican fast-food chain Guzman y Gomez shed 3.3 per cent as investors took profits after the stock soared more than 30 per cent at its ASX debut on Thursday.

Embattled online bookseller Booktopia extended its voluntary trading suspension as it scrambles to secure funding from suppliers, shareholders and other sources to pay out redundancies and keep trading.

“Indicative interest has been provided from some of these parties, and they are currently undertaking due diligence of the company to determine if support will be forthcoming,” the company said in a statement to the ASX.

Booktopia is hoping to provide a further update to the market by the “end of next week”.

The lowdown

Capital.com senior financial market analyst Kyle Rodda said defensive stocks made up many of the Australian sharemarket’s gains, with gold shares gaining traction amid political turmoil in Europe.

“Rare earth stocks were the worst performers, with the broader mining sector still looking sluggish as the outlook for China’s growth remains murky,” he said.

Wall Street has slipped lower to start the week.Credit: Bloomberg

On Wall Street overnight, US stock indices edged back from their recent records, weighed down by a dip in the shares of market darling Nvidia, following a mixed set of reports on the American economy.

The S&P 500 Index dropped 0.3 per cent from its record high set before Wednesday’s public holiday. The Nasdaq Composite Index also pulled back from its record with a loss of 0.8 per cent. The Dow Jones Industrial Average performed best, with a gain of 0.8 per cent.

Nvidia shares lost 3.5 per cent, putting at risk their eight-week winning streak. The chip company has been the main beneficiary of Wall Street’s frenzy around artificial-intelligence (AI), and it had supplanted Microsoft on Tuesday as the market’s most valuable company. The stumble ceded the top spot back to Microsoft.

In the bond market, Treasury yields ticked higher following a spate of mixed reports on the US economy.

The number of US workers filing for unemployment benefits eased last week, but not by as much as economists expected. A separate report said manufacturing was growing, but not as quickly as economists thought. Home builders broke ground on fewer new homes last month than expected.

The hope on Wall Street is for a slowdown in US economic growth. That could help keep a lid on inflationary pressures and convince the Federal Reserve to cut its main interest rate later this year in a further boost for equity prices.

The yield on the 10-year Treasury climbed to 4.25 per cent, from 4.22 per cent late Tuesday. The two-year yield rose to 4.73 per cent, from 4.71 per cent.

Tweet of the day

Quote of the day

“Guzman looks expensive. We think the market takes a different view on Guzman’s long-run prospects – namely, how long the company can keep building stores that generate excess returns,” said Morningstar analyst Johannes Faul, after investors drove up the share price for Guzman y Gomez 36 per cent at its market debut on Thursday.

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With AP

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