Australian sharemarket dips after recent strong run, as expected

The Australian sharemarket dipped after its recent winning streak, as widely expected, with Flight Centre among the worst performers.

A pullback was expected after seven straight days of gains on the ASX. Picture: Peter Parks/AFP

The Australian sharemarket retreated moderately after seven straight days of gains, as expected by analysts and following a negative US lead.

The S&P/ASX 200 closed 0.3 per cent lower at 6179, while the All Ordinaries Index dipped 0.2 per cent to 6387.

The Australian Securities Exchange says over the past five days, the All Ords has gained more than 2 per cent but is down more than 6 per cent for the year to date.

ThinkMarkets Australia analyst Carl Capolingua said it was significant the market had held onto some gains as it “stamps out a low in investors’ minds”.

“It gives them confidence, but it also makes them start to wish they’d gotten in lower down. Now they’ll be waiting to buy into any pullback to try and catch up,” Mr Capolingua said.

“The most interesting scenario will be if we don’t get a pullback, then investors are going to have to chase prices higher to get their desired exposure.

“You end up in a situation where people are buying because of FOMO (fear of missing out), and that’s when prices can really move.”

Flight Centre was a poor performer, plunging 7.7 per cent to $13.28, as was engineering group Cimic, down 6.52 per cent to $20.78, despite being awarded a $110 million contract extension at the Caval Ridge coalmine in Queensland.

Flight Centre didn’t make any announcements, but its shares were sold off. Picture: NCA NewsWire/Andrew Henshaw

In company news, biotech giant CSL, which has a huge program of work including a COVID-19 vaccine, released improved profit guidance for 2020-21, sending its shares 1.36 per cent higher to $302.29.

“Outside of plasma (collections), the rest of the business continues to grow,” Mr Capolingua said.

“They’re going to grow earnings by 3-8 per cent by their own estimates despite the crisis and despite the fact that CSL operates in over 35 countries around the world. So, it’s a massive achievement.”

Bank of Queensland reported a profit plunge as it prepares for higher loan losses, but its shares jumped 5.16 per cent to $6.73.

“Outside of the writedowns it was actually a really solid result,” Mr Capolingua said.

“NIM (net interest margin) was up 3 per cent, which was a surprise to us, and we weren’t expecting to see the growth in lending they’ve delivered.

“The outlook statement was what we were really waiting to see, and it was pretty neutral, but this was better than we were expecting.”

ANZ slid 1.03 per cent to $19.30, Commonwealth Bank gave up 1.02 per cent to $68.67, National Australia Bank backtracked 1.29 per cent to $19.10 and Westpac shed 1.37 per cent to $18.70.

Rio Tinto eased 1.26 per cent to $95.33, and BHP slipped 0.77 per cent to $36.03.

The Aussie dollar was fetching 71.69 US cents, 55.47 British pence and 61.02 Euro cents in afternoon trade.