ASX closes down; Mineral Resources, Wesfarmers decline

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

The numbers

The Australian sharemarket closed lower on Thursday, led down by energy and consumer discretionary stocks.

The S&P/ASX 200 lost 26.3 points, or 0.33 per cent, to 8045.1 at the close, with all but three of the 11 industry sectors declining.

Wall Street was on edge ahead of Nvidia’s results, which came out after the bell and sent its shares down in after-hours trading.Credit: AP

The lifters

All four big banks trended higher while the heads of the Commonwealth Bank and Westpac faced questions from the House of Representatives economics committee inquiry.

Steadfast Group gained 1 per cent after the insurance broker on Wednesday posted a 21.8 per cent rise in underlying net profit to $252.2 million and flagged earnings could hit $300 million this year. Telecommunications provider Spark New Zealand (up 3.3 per cent), energy company Mercury NZ (up 2 per cent) and Meridian Energy (up 2 per cent) were among the biggest large-cap gainers on Thursday.

Qantas stocks gained 0.8 per cent after posting a $1.25 billion full-year profit – down 28 per cent on the previous financial year, with its profitability slightly below market expectations. The embattled airline said revenue at its international arm would continue to fall in the December half amid pressure on airfares and rising costs.

The laggards

Mineral Resources shares fell 8.1 per cent after it cancelled its dividend for the first time in more than a decade amid an ongoing downturn in lithium prices. Supermarket giant Woolworths shed 2.4 per cent the day after posting a fall in full-year earnings as shoppers switched to cheaper home brands. IT company NEXTDC declined 1.4 per cent as its cautious earnings outlook disappointed investors.

Retail giant Wesfarmers fell 4.1 per cent after the company said profit rose 2.7 per cent to $2.56 billion in the year to June 30, but warned that sales growth at its Bunnings stores has moderated since the start of the new financial year amid a general softening in building activity.

Perpetual shares slumped 3.8 per cent after the performance of the company’s asset management business disappointed investors. Perpetual, which is set to be broken up under a deal with private equity giant KKR, said it had experienced “larger than anticipated net outflows” in its asset management arm – the part of the business that will continue to be owned by Perpetual shareholders.

Overall, Perpetual posted a net loss of $472.2 million due to “significant items”. The company also announced that chairman Tony D’Aloisio would retire from the board early next year, to be replaced by deputy chair Gregory Cooper.

Qantas stocks gained 0.8 per cent after chief executive Vanessa Hudson announced a $1.25 billion full-year profit.Credit: Dominic Lorrimer

Luxury fashion retailer Cettire continued its troubled run, with its shares plunging 20.3 per cent after flagging trouble getting its financial accounts audited due to revenue recognition issues and a tough June quarter in which it barely made any money.

The lowdown

Sean Sequeira, chief investment officer at Australian Eagle Asset Management, said companies that posted poor earnings today were punished harshly in the market.

“The consumer sector stood out only because we had Wesfarmers, one of the largest consumer discretionary stocks report today, and while the report showed that both Bunnings and Kmart did perform relatively well, things are going to start to slow in the next little while in terms of revenue growth. Coming into this report, Wesfarmers was pretty well backed by the market, so some of that has been unwound,” Sequeira said.

“Those ones that have missed their expectations have been absolutely smashed, I suppose is one way of saying it.

“Mineral Resources came in with the outlook for cash flow not as positive such that it could significantly reduce their debt pile, particularly in a period when commodity prices are under pressure, and that leaves the company with a little bit more risk than what I think market participants are comfortable with at the moment, so that hurt them.”

Tweet of the day

Quote of the day

”Our focus this year has been getting the balance right in delivering for customers, employees and shareholders while building a better and stronger Qantas Group. Restoring trust and pride in Qantas as the national carrier is our priority,” airline chief executive Vanessa Hudson said in a statement for her maiden full-year earnings report.

You may have missed

At face value Nvidia, the chipmaker at the heart of the frenzy of activity and investment in artificial intelligence, has produced another spectacular result.

Its revenue of $US30.04 billion ($44 billion) for the three months was up 15 per cent on its booming first quarter result and 122 per cent above the same quarter last year. That was solidly above the $US28.7 billion consensus forecasts by analysts.

It was, however, the group’s own forecast for third-quarter sales of $US32.5 billion ($47.8 billion) – comfortably above the $US31.9 billion consensus expectation – that disappointed enough investors to see the company’s shares sliding sharply in extended trading, writes senior business columnist Stephen Bartholomeusz.

With AP

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