Australian sharemarket climbs despite impact of Sydney lockdown extension, buy-now-pay-later hit

The ASX managed to climb higher despite the blow of Sydney’s lockdown being extended and buy-now-pay-later stocks taking a hit from a new entrant.

The Australian sharemarket closed higher despite the negative impact of Sydney’s ongoing lockdown on travel stocks and a new powerful entrant in the nation’s booming buy-now-pay-later sector.

The S&P/ASX200 closed 0.31 per cent higher at 7354.7 while the All Ordinaries Index added 0.26 per cent to 7631.8.

It came after Wall Street fell as new data pointed to rising inflation.

The NSW premier announced the lockdown in Sydney would be extended for at least another two weeks after 97 new locally acquired Covid-19 cases were recorded, which hit travel stocks, OMG chief executive Ivan Tchourilov noted.

“This extension will undoubtedly hurt the domestic economy and in particular the already struggling tourism industry – which NSW contributes approximately $50b to annually,” he said.

Flight Centre dropped 3.39 per cent to $15.10, Webjet shed 2.55 per cent to $4.97, Qantas softened 0.63 per cent to $4.71 and Sydney Airports eased 0.51 per cent to $7.80 as its board reportedly met to discuss the $8.25 cash per share takeover offer from an IFM Investors-led consortium, announced earlier this month.

Sydney’s lockdown has been extended until at least July 30. Picture: NCA NewsWire/Nikki Short

“Meanwhile, there have been big announcements from Apple overnight and leading global payments platform PayPal today,” Mr Tchourilov said.

“Apple has told the world they’re working on their own BNPL product, ‘Apple Pay Later’, while PayPal has today launched ‘Pay in 4’ to its nine million customers in Australia.

“These companies are 10 times the size of Afterpay and they want the market to know that.

“As a first for the industry, they also announced that they wouldn’t be charging any fees for late payments.

“This comes as a huge blow to major players such as Afterpay and Zip – late fees made up around $70m in annual revenue last year for Afterpay, so it’s significant – but even more so to some of the junior players in the sector with smaller market share.”

Afterpay plunged 9.59 per cent to $107 and Zip tumbled 11.38 per cent to $7.32, while Splitit gave up 4.5 per cent to 53 cents and Openpay retreated 4.92 per cent to $1.45.

“The more competition increases and consumer discounts such as waived late fees are applied, you can’t help but think there will be fewer names in the space in the not too distant future,” Mr Tchourilov said.

“They simply won’t be able to compete.”

Analysts have already bet on PayPal grabbing some of Afterpay’s market share in Australia. Picture: NCA NewsWire/Bianca De Marchi

Utilities were strong performers, with gas pipeline company APA Group lifting 4.27 per cent to $9.52 while power transmission business Spark Infrastructure leapt 7.83 per cent to $2.48 before entering a trading halt pending an announcement.

Seven Group Holdings gained 3.49 per cent to $22.85 after achieving a 48.4 per cent interest in takeover target Boral, which has urged its shareholders to reject the Kerry Stokes-led company’s $7.40 per share offer, saying it undervalues the building products provider.

Boral dipped 0.54 per cent to $7.35.

Blackmores jumped 6.17 per cent to $76.43 after Nine’s Australian Financial Review suggested the vitamins giant was preparing for a potential bid amid takeover action in its sector.

National Australia Bank announced late on Tuesday it was is in discussions with Citigroup about the potential acquisition of its Australian consumer business, bumping its shares two cent higher to $26.26.

ANZ backtracked 0.6 per cent to $27.65, Commonwealth Bank lifted 0.4 per cent to $98.78 and Westpac slid 0.24 per cent to $25.27.

Rio Tinto softened eight cents to $128.28 and BHP appreciated 0.5 per cent to $50.96.

The Aussie dollar was fetching 74.68 US cents, 53.92 British pence and 63.29 Euro cents in afternoon trade.

Originally published as Australian sharemarket climbs despite impact of Sydney lockdown extension, buy-now-pay-later hit