Virus concern drags on ASX

Coronavirus hangs over the market, with companies and the RBA highlighting the outbreak as a cause for uncertainty.

A woman wearing a protective face mask walks outside of a closed-off Apple Store in Beijing. Picture: AFP

While the pace of new virus cases slowed on Tuesday, the virus still hung heavy over the market, with many of the day’s company results, and even the RBA’s latest minutes, highlighting the outbreak as a cause for uncertainty in the second half of the year.

A warning from Apple overnight set the tone, as it said it wouldn’t meet its revenue projections due to delays in production and curtailed demand.

That sentiment was echoed by local tech play Altium. It finished Tuesday’s session at $39.26, the worst performer with a drop of 8 per cent, or as much as 15 per cent intraday.

Supply chain disruption was called out in results from retail chains Coles and Kogan and glove maker Ansell said it would have a mixed effect on its results.

The skittish tone in the market pushed the benchmark S&P/ASX 200 lower by 11 points, or 0.16 per cent, to 7113.7 after hitting lows of 7096.8.

The All Ords finished down 13 points, or 0.18 per cent, to 7208.3.

“If this is the market’s initial reaction to irrefutable evidence of the first significant supply chain wobble, best to buckle in as we could be in for a bumpy ride the next few weeks,” AxiCorp chief market strategist Stephen Innes said.

“I’m struggling to find any research report that doesn’t suggest Covid-19 could significantly affect short-term earnings.”

Meanwhile, the latest RBA minutes described the virus as a material risk to the outlook of the economy.

Earnings stepped up a notch ahead of the peak of results releases later this week.

BHP provided the biggest lift to the market as it posted a 29 per cent boost to half year profits – shares finished higher by 0.8 per cent to $38.78.

Across the rest of the bulk miners, Rio Tinto added 0.5 per cent to $98.31 despite cutting its iron ore forecasts in the wake of the damage from Cyclone Damien.

Morgan Stanley noted that the decline in Rio’s production could boost prices of the commodity and offset the loss – sentiment that likely helped to fuel Fortescue’s 1.3 per cent jump to $11.06.

An in-line result from Coles was marred by reports it had underpaid salaried staff in its liquor and supermarkets businesses. Shares in the supermarket fell by 1 per cent to $16.75.

Cochlear shares slipped by 3.4 per cent to $226.62 as its interim profit missed forecasts, and as it said it was bracing for a $30m hit from the virus outbreak.

Ansell profit surged 67 per cent, still shares finished lower by 2.9 per cent to $31.42 while Scentre Group detailed its plans for mall overhaul which pulled shares lower by 1.6 per cent to $3.72.

Seven West Media shares fell 21 per cent to a record low of 20c after it swung to a first half loss.

Monadelphous was one of the best performers for the session as its maintenance and industrial service arm posted record revenues. The stock finished higher by 5.5 per cent to $17.28.

Major banks rebounded after a slip on Monday - Commonwealth Bank put on 0.9 per cent to $90.26, NAB finished flat at $27.28, Westpac edged up by 0.51 per cent to $25.75 and ANZ tipped higher by 0.26 per cent to $26.65.

The Australian dollar was 0.28 per cent weaker against the US dollar, buying US66.94c by late Tuesday afternoon.