Australian sharemarket closes marginally higher as tech stock volatility spreads to resources sector

The ASX closed marginally higher after tumultuous trade, with opportunists pouncing on a company that got hammered midweek.

The Australian sharemarket closed marginally in the green after seesawing during the final session of the week, with volatility spreading from the tech sector to resources.

The S&P/ASX200 closed just 10.7 points higher at 7030.3 while the All Ordinaries Index lifted 12.7 points to 7265.3.

CommSec analyst Steve Daghlian said the local bourse had a strong start after Wall Street provided a solid lead off the back of encouraging unemployment data, rising as much as 0.5 per cent in early trade before swinging into the red.

Mining and energy stocks were among the worst performers after iron ore and oil prices fell by 2 per cent.

Rio Tinto shed 0.93 per cent to $122.12, BHP retreated 1.1 per cent to $47.75 and Fortescue slid 2.24 per cent to $22.30.

Woodside Petroleum dropped 3.35 per cent to $21.61, Oil Search declined 2.42 per cent to $3.63 and Santos slumped 4.76 per cent to $6.61.

OMG chief executive Ivan Tchourilov said it had been a tumultuous week, with iron ore prices coming “off the boil” after recent record highs.

Market volatility had increased - especially in tech stocks - and was starting to flow through to material stocks, he said.

Iron ore prices have “come off the boil” after recent record highs.

“Although central banks have reiterated their stance (interest rates lower for longer), which should be accommodative for equities, a lot of the easy money may have already been made, so investors will need to be a lot more selective in their approach to outperform the market in the months to come,” Mr Tchourilov said.

In the tech sector, Afterpay was 0.11 per cent lower at $93, smaller buy-now-pay-later rival Zip sank 4.48 per cent to $7.04 and accounting software provider Xero lifted 4.16 per cent to $127.20.

The big four banks were mixed, with ANZ firming 0.5 per cent to $28, Commonwealth Bank giving up 0.36 per cent to $98.05, National Australia Bank inching three cents lower to $26.47 and Westpac improving 0.5 per cent to $25.65.

Pre-paid payments service EML Payments jumped 15.8 per cent to $3.37.

Shares in the company plummeted more than 45 per cent on Wednesday after announcing the Central Bank of Ireland had raised serious regulatory concerns about its Irish subsidiary PFS Card Services relating to anti-money laundering and counter terrorism financing.

“Traders have seen this as an opportunity and have been rewarded as the stock has now bounced some 20 per cent from the low,” Mr Tchourilov said.

Qantas put on 1.28 per cent to $4.74 a day after announcing more redundancies for international cabin crew under an expression of interest program, which the airline expects will attract several hundred applications.

Responding to Qantas’ commission cutting plan, Goldman Sachs said: “Travel agents have the opportunity to book on competitor airlines”. Picture: Mark Wilson

The national carrier also announced it would cut commissions paid to travel agents on international tickets from 5 per cent to 1 per cent in July next year.

Goldman Sachs said it did not expect this would become a broad-based phenomenon across all airlines “although it remains a key risk factor”.

“We believe that travel agents will remain a key link to the airline distribution supply chain and although commission models may be restructured, we do not anticipate a strong permanent margin compression for these players,” Goldman Sachs analysts Darshana Nair Syama and Andrew McLennan said.

“Travel agents have the opportunity to book on competitor airlines, potentially resulting in no downside impact.”

Webjet gained 5.37 per cent to $4.91 despite advising Mitsubishi UFJ Financial Group had reduced its stake in the travel company.

Flight Centre rose 2.01 per cent to $15.23.

Sydney Airport held its annual general meeting, advising it would not issue guidance for the remainder of 2021, with chairman Trevor Gerber saying “an important indicator for us will be seeing, with reasonable clarity, a path for the recovery in international travel”.

Sydney Airport is coming back to life. Picture: NCA NewsWire/Gaye Gerard

Its shares added 1.39 per cent to $5.85.

Mr Daghlian noted Sydney Airport released its traffic numbers on Thursday, showing a rise in domestic travel.

“There were about 1.5 million people making their way through Sydney Airport just in April, which compares to less than 50,000 a year earlier,” he said.

One of the worst performers was online retailer Kogan, which reported months of aggressive expanding and stockpiling had backfired, leaving it drowning in inventory and paying higher warehousing costs.

The company slashed its full year earnings forecast, sending its shares to a 12-month low of $8.70, down 14.29 per cent.

The Aussie dollar was fetching 77.46 US cents, 54.59 British pence and 63.3 Euro cents in afternoon trade.