ASX closes flat after midday surge; Sigma soars in Chemist Warehouse debut

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

The numbers

The Australian sharemarket retreated from all-time highs during the session to close flat on Thursday as investors digested a slew of major company results. Sigma Healthcare shares soared as it made its debut as a merged company with Chemist Warehouse.

The S&P/ASX 200 rose 4.7 points, or 0.1 per cent, to 8540 points at another closing high, having briefly hit 8575.20 points around midday, which set an intraday record. Mining stocks were the biggest gainers, keeping the market in the green even as eight of its 11 industry sectors declined.

Sigma Health Care CEO Vikesh Ramasunder and Chemist Warehouse founders Sam Gance, Jack Gance and Mario Verrocchi ring the bell at the ASX.Credit: Louie Douvis

The Australian dollar made marginal gains, and was valued at 63 US cents as at 4.29 pm, as figures showed inflation was unexpectedly worse for Americans, prompting investors to revise their hopes for more than one rate cut this year.

The lifters

All eyes were on pharmacy wholesaler Sigma’s first day of trading as a merged company after taking over Chemist Warehouse. Investors sent the stock soaring 5.4 per cent. The merged entity was the 27th largest stock on the sharemarket when it started trading with a market capitalisation of about $31.8 billion, according to the ASX.

Miners rallied to hit their highest level since mid-December after the price of iron ore strengthened overnight. Market heavyweight BHP, the biggest mining stock on the ASX, was up 2.1 per cent, while Fortescue gained 1.8 per cent and Rio Tinto added 1.1 per cent.

Battery minerals provider Liontown Resources added 9.2 per cent and WA-based Mineral Resources surged 7 per cent, making them the top-performing stocks on Thursday.

Meanwhile, online furniture retailer Temple & Webster revealed a 24 per cent jump in first-half sales despite consumers’ cost-of-living challenges as it won new customers and recorded higher average orders. Investors cheered the results, sending its shares soaring 13 per cent.

The four big banks had a mixed day of trading, with CBA up 0.5 per cent to reach a record high. NAB was also stronger (up 0.3 per cent), while Westpac and ANZ traded flat.

The laggards

Qantas shares shed 2 per cent to $9.32 after Macquarie removed its buy rating for the stock, cutting it to neutral with a 12-month price target of $9.30. In a research note, its analysts warned that “fair weather never lasts”, citing reports of falling domestic airfares and more competitive capacity on larger routes like the US and Europe that were clouding the airline’s outlook for next financial year.

Stocks for IAG tumbled, plummeting 12.6 per cent despite profits for the nation’s largest general insurer leaping 91.2 per cent in the first half of the financial year.

Treasury Wine Estates, owner of Penfolds, reported a 31.5 per cent jump in net profits for the first half. But its shares sank 5.7 per cent as it failed to find a buyer for its commercial, lower-priced wine brands such as Wolf Blass and Lindemans and said it was forced to keep them.

The lowdown

Adam Dawes, senior investment adviser at Shaw and Partners, described the merger between Sigma and Chemist Warehouse as “a real bonus” and a “good lift for Sigma”.

“The stock has been moving and changing hands, with over 300 million shares traded today. It’s the most Sigma has traded in its entire history ... but that will calm down,” Dawes said.

Despite the merger sending Sigma soaring, Ben Clark, portfolio manager at TMS Private Wealth, said it would take time for the stock to stabilise and for investors to grasp the growth prospects of the merged entity.

“The market has been given significantly less information than we would normally see for such a big business. That’s why I think there’s been a lot of volatility in the share price as everyone is trying to work out how expensive it is.”

Wall Street retreated after surprising inflation data. Credit: AP

In the US overnight, Wall Street’s overall momentum remained downward, and the majority of stocks fell after inflation data came in higher than expected. The S&P 500 dropped 0.3 per cent, and the Dow Jones sank 225 points, or 0.5 per cent, while the Nasdaq composite edged higher by less than 0.1 per cent.

Treasury yields also remained notably higher in the bond market, cranking up the pressure on financial markets after the morning’s inflation report said US consumers had to pay higher prices for eggs, petrol and other items than economists had expected.

Overall inflation was 3 per cent for US consumers in January. That was worse than the 2.9 per cent inflation rate of December, which is what economists had expected to see again. The inflation report suggested that pressure on US households’ budgets was amplifying.

Following January’s discouraging inflation data, traders are betting on a 29 per cent chance the US Federal Reserve will not cut rates at all this year, according to data from CME Group. That’s up from a less than 20 per cent chance seen the day before.

Tweet of the day

Quote of the day

“Trump’s post was peculiar. Lower interest rates don’t go hand in hand with tariffs. Indeed, because they increase costs to businesses and consumers of the country that imposes them, tariffs are inflationary and therefore more likely to lead to increases in interest rates, not decreases.”

That’s Stephen Bartholomeusz on how Trump’s latest tariff escalation could be another hurdle for an interest rate cut in the US. Read his piece here.

You might have missed

Rising insurance premiums will finally take a breather, providing relief to Australians battered by hefty price hikes over the last couple of years, according to the country’s largest insurer. Handing down a bumper $800 million profit in the first six months to December 31, a 91 per cent surge on last year, Insurance Australia Group (IAG) chief executive Nick Hawkins said premiums should start to ease as inflation starts to cool.

With AP, Bloomberg

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