ASX falls as miners, banks, property stocks tumble; Telstra gains

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

The numbers

The Australian sharemarket closed sharply lower on Thursday, its fourth day of losses, as investors digested a flurry of mixed company results, and hotter-than-expected labour data dimmed hopes for more rate cuts.

The S&P/ASX 200 finished the session down 96.4 points, or 1.2 per cent, to 8322.80, with a slump in the mining and banking heavyweights and real estate investment trusts wiping out the boost from the energy and communications services sectors.

Wall Street closed at record highs, but investor sentiment in Australia wasn’t quite so rosý.Credit: Reuters

The lifters

The trading session’s bright lights included Telstra, which saw its shares rally 5.6 per cent after it announced it would splash $800 million on upgrading its 5G mobile network, as the telco giant lifted its first-half profit and dividend thanks to strong performance from its mobiles unit.

Wesfarmers stock was also in strong demand, which pushed its share price up 1.3 per cent. The retail conglomerate reported a 2.9 per cent rise in first-half profits to $1.47 billion thanks to solid earnings from its Bunnings, Kmart and Officeworks chains, and said they “continued to trade well” the first six weeks in the June half, with Kmart’s growth accelerating.

Pilbara Minerals jumped 7 per cent after Australia’s largest pure-play lithium producer said it sees demand and prices recovering on the restart of a large mine and refinery in China, even as it reported a $69 million net loss in its half-year earnings.

Energy stocks were also strong performers, led by oil and gas giant Woodside (up 1 per cent) and its smaller rival Santos (up 2.1 per cent).

The laggards

Mining stocks declined sharply after Fortescue Metals Group reported its first-half profit had collapsed by more than half to $US1.55 billion ($2.5 billion) as softer demand from China weighs on iron ore prices. The miner slashed its dividend by 54 per cent to 50 cents a share. At the same time, iron ore giant Rio Tinto saw its first-half profit fall 7.6 per cent to $US10.9 billion and declared a $US2.25 per share final dividend, the lowest payout in seven years.

Fortescue’s shares tanked 6.2 per cent, Rio lost 1.5 per cent and BHP – the world’s biggest miner with the lowest production cost base – was down 2 per cent.

Real estate investment trusts were dragged down by a 5 per cent plunge in Goodman Group shares after the biggest property company on the ASX raised $4 billion in a discounted sale of new shares to help pay for data centre developments, diluting returns for existing investors.

Banks continued their difficult week amid rising investor concern about their sky-high valuations as pressure continues to build on banking margins. The RBA’s rate cut has created additional headwinds for the banks as they move to lower their home loan rates. Following National Australia Bank’s lower-than-expected earnings update on Wednesday, NAB shares were down another 3.3 per cent. Westpac fell 3 per cent, ANZ slumped 3.1 per cent, and the Commonwealth Bank – the nation’s biggest lender and the largest stock on the local sharemarket - dropped 2 per cent.

Super Retail Group plunged 12.5 per cent after the Rebel Sports and Supercheap Auto owner posted a $130 million first-half profit, down 9 per cent from a year ago. Other companies losing ground after their results included fund manager Magellan Financial Group (down 10.1 per cent); pokies maker Aristocrat Leisure (down 4.3 per cent) and pathology chain Healius (down 6.6 per cent).

Software maker WiseTech Global’s shares are halted from trading pending a governance update from the board, intensifying focus on the future of the company’s under-fire founder, Richard White. The freight-software firm asked for the suspension “to enable the company to be in a position to provide an update on current board discussions relating to matters of governance”.

The lowdown

It was the fourth day of losses for the local bourse, and by far the bloodiest as a slew of company results failed to impress and sent investors heading for the exits.

“This reporting season, which started strongly enough, has imploded in spectacular fashion,” said IG market analyst Tony Sycamore. “When stocks are priced for perfection as the banks have been, even minor misses will be punished.”

The market sell-off intensified after the Australian Bureau of Statistics said the economy added 44,000 jobs in January, more than double the forecast 20,000, and the participation rate hit a fresh record even as the unemployment rate edged up slightly to 4.1 per cent.

RBA governor Michele Bullock said on Tuesday labour market tightness would be a key area to watch for policymakers in their next rate decisions, as additional job strength could rekindle inflation. The Australian dollar rose 0.4 per cent to US63.66¢ on the report.

The manic day on the ASX followed a quiet session on Wall Street on Wednesday, where the S&P 500 inched up 0.2 per cent to a fresh record. The Dow Jones also added 0.2 per cent, and the Nasdaq composite edged up 0.1 per cent.

Microsoft was the strongest force pushing the S&P 500 upward. It rose 1.3 per cent after saying it had developed what it calls the world’s first “quantum processing unit,” which could lead to the development of much more powerful computers. While the gain was relatively modest, Microsoft’s gargantuan size gives its stock’s movements huge sway on the S&P 500 and other indexes.

Elon Musk’s Tesla rose 1.8 per cent after another electric-vehicle company, Nikola, plunged 39.1 per cent following its filing for Chapter 11 bankruptcy protection. The electric truckmaker said it will try to sell off its assets and wind down its business.

with AP, Bloomberg

Get the Market Recap newsletter each weekday afternoon.