Australian shares flat as banks slip, miners dig in

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

The numbers

The Australian sharemarket has recovered from morning losses to finish flat as a rotation out of banking stocks and into the iron ore giants continues.

The benchmark S&P/ASX 200 index on Thursday finished down 1.9 points, or 0.02 per cent, to 8595.8, while the broader All Ordinaries gained 4.9 points or 0.06 per cent, to 8833.6.

The ASX opened slightly lower on Thursday morning. Credit: Getty Images

Thursday’s close was still the highest ever for the All Ordinaries and the second-highest for the ASX 200, behind Wednesday’s figure. Eight of 11 industry sectors were in the red.

The Australian dollar was buying US65.72¢ US cents, from US65.75¢ at 5pm on Wednesday.

The lifters

The mining sector continued its momentum from Wednesday with a 3 per cent boost. This was driven in part by the increased price of iron ore, which jumped 2.5 per cent higher overnight. BHP, up 5.6 per cent, and Fortescue and Rio Tinto, up 1.8 per cent each, were all beneficiaries of this.

Healthcare informatics company Pro Medicus rocketed up 7.8 per cent after announcing new multimillion-dollar partnerships with US-based hospitals.

Pro Medicus chief Sam Hupert.Credit: Eamon Gallagher

Plumbing company Reece advanced 4 per cent, as it slightly rebounds from a disastrous Friday last week when it shed more than 18 per cent after announcing a profit downgrade. The energy sector, up 0.8 per cent, was powered by Woodside and Yancoal which rose 0.8 per cent and 2.8 per cent, respectively.

The laggards

Tech retailer JB Hi-Fi lost 5.7 per cent as the consumer discretionary sector slipped. Fellow retailers Wesfarmers, down 2 per cent, and Harvey Norman, down 1.5 per cent, lost value. The declines follow Australian Bureau of Statistics figures released on Wednesday showing softer than expected retail sales in Australia, cementing expectations for a rate cut in July.

About $120 million has been wiped off the market capitalisation of childcare provider G8 Education in the two days since confidence in the sector was rocked by allegations that one of G8’s former employees, Joshua Dale Brown, committed sexual abuse offences. Shares on Thursday slumped 7.4 per cent to close at $1.

The financial sector weighed on the index on Thursday.Credit: Dominic Lorrimer

The banks weighed on the bourse, with the index’s biggest stock, Commonwealth Bank, shedding 2.2 per cent in a round of profit taking. National Australia Bank and Westpac declined 1 per cent and 0.7 per cent, respectively.

The lowdown

Some investors took today as an opportunity to cash in on Commonwealth Bank’s premium price in a round of profit taking – which led to a 2 per cent decline for the bank – as analysts warn it is overvalued.

It is not just Commonwealth Bank shares, but many that are overvalued, said AMP economist Shane Oliver, who is forecasting sharemarket growth of about 6 per cent for the next year, down on last year’s near 10 per cent return.

US President Donald Trump’s tariffs are set to resume on July 9. Credit: AP

“Shares are overvalued trading on high price-to-earnings multiples,” Oliver said in a note to investors. “This is particularly the case for US shares but also to a lesser degree for Australian shares.”

The overvaluation of shares is just one reason Oliver believes investors should expect more volatility this financial year.

Increased US debt, geopolitical risks, Wall Street’s reliance on tech stocks and soft economic growth in Australia threatens the market’s success.

So too does US President Donald Trump’s trade wars, with tariffs set to resume on July 9. While the White House does have some deals in place with the UK, China and now Vietnam, Australia has not negotiated a carve out.

Quote of the day

‘How Qantas weathers this attack will depend in large part on whether it is perceived as villain or victim, the size and the nature of the information stolen.’

Columnist Elizabeth Knight on the Qantas cyberattack.

Tweet of the day

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