Australian sharemarket slumps in morning trade but manages to close barely changed

The ASX managed to creep higher after slumping in early trade, finishing barely changed following a lacklustre session as the nation’s outbreak worsened.

The Australian sharemarket slumped in morning trade after the nation’s Covid outbreak worsened but managed to claw back almost all of its losses in a lacklustre trading session.

The benchmark S&P/ASX200 index closed just 6.1 points weaker at 7301.2 after shedding 66 points or 0.9 per cent at its lowest point of the day, while the All Ordinaries Index finished 7 points softer at 7565.5.

Before the Northern Territory announced its snap lockdown, AMP Capital chief economist Shane Oliver said lockdowns in Sydney, Perth and Queensland would likely cost the economy $2.5bn, but would probably not derail the recovery.

CommSec analyst Steve Daghlian noted the ANZ-Roy Morgan survey of consumer confidence only eased by 0.2 per cent over the past week, saying that was perhaps because it didn’t capture the full picture of new cases, restrictions and lockdowns unfolding.

“Next week’s survey could be perhaps a little more interesting,” Mr Daghlian said.

OMG chief executive Ivan Tchourilov said the longer lockdown continued, the greater the perception online shopping would ramp up again.

A near deserted Elizabeth Street in the heart of Sydney’s CBD on day three of the lockdown. Picture: NCA NewsWire/Gaye Gerard

“Traders are clearly targeting Covid- and lockdown-sensitive stocks such as retailers for short term speculative trading opportunities,” he said.

Mr Tchourilov pointed to Myer, which lifted 1.49 per cent to 34 cents, and Harvey Norman, which put on 2.47 per cent to $5.40.

Retailer Kathmandu, which also owns the Ripcurl and Oboz brands, flagged lower full-year group sales as a result of lockdowns, with 40 shops closed for the next two weeks in NSW, while the Perth four-day lockdown has shuttered 26 stores.

Victoria’s most recent lockdown affected 62 of the group’s stores.

Kathmandu shares fell 4.05 per cent to $1.42.

Boating, camping and sporting goods retailer Super Retail Group, which owns brands including BCF and Rebel, dropped 2.99 per cent to $12.67.

Kathmandu announced the closure of multiple stores. Picture: NCA NewsWire/Gaye Gerard

Among travel stocks, Webjet gave up 1.66 per cent to $4.74, Sydney Airport declined 0.69 per cent to $5.76, Qantas added 0.22 per cent to $4.55, Corporate Travel Management slipped 0.29 per cent to $20.84 and Flight Centre was unchanged at $14.55.

Regional Express announced it had moved to lease two additional Boeing 737-800NGs aircraft to provide it with the ability to launch new routes to other capital cities, large regional centres and popular leisure destinations.

Shares in the company were steady at $1.20.

The group behind American fast food giants KFC and Taco Bell in Australia, Collins Foods, reported an 18.2 per cent surge in full-year underlying net profit, revealing aggressive restaurant expansion plans including at least 66 new KFCs around the nation by 2028.

While Wilsons Equity Research analyst James Ferrier said the rollout plans for KFC Australia were “an encouraging read on management’s confidence in the brand and financial performance”, shares in Collins Foods dropped 5.67 per cent to $11.98.

Collins Foods plans many more new KFC and Taco Bell stores around the nation. Picture: Stewart McLean

“It’s profits have actually done reasonably well here in Australia - sales up about 13 per cent over the year, its margins up at around 18 per cent,” Mr Daghlian said.

Genworth Mortgage Insurance plunged 15.75 per cent to $2.14 after providing an update on its lenders mortgage insurance deal with Commonwealth Bank, saying it seeks to extend the agreement beyond the December 2022 expiry date.

CBA rose 0.61 per cent to $100.48, ANZ gained 0.18 per cent to $28.24, National Australia Bank inched one cent lower to $26.11 and Westpac firmed 0.16 per cent to $25.86.

Mr Tchourilov said energy and mining stocks were the biggest drag on the market.

Rio Tinto weakened 0.83 per cent to $125 while fellow mining giant BHP retreated 0.7 per cent to $48.06 after inking a deal to sell its one-third interest in the Cerrejon thermal coal joint venture in Colombia to Glencore.

BHP is making good on its pledge to get out of thermal coal.

Morgan Stanley said it was a step in the right direction for BHP, which promised in August to exit thermal coal over a timeframe of about 24 months, but the $US294m ($A222m) cash payment for the asset was below its analyst’s valuation of $US429m ($A324m).

As widely anticipated, Santos committed to front-end engineering and design work for the Dorado oilfield development offshore Western Australia, which RBC Capital Markets views as the most significant project driving the company’s forecast production growth.

Shares in Santos dropped 0.55 per cent to $7.21.

Burgundy Diamond Mines leapt 11.11 per cent to 30 cents after announcing it had taken steps towards the proposed start of production of fancy yellow diamonds at the Ellendale project in WA next year including acquiring secure premises in Perth for downstream operations.

Africa-focused gold hopeful Polymetals Resources had a poor ASX debut, sinking 15 per cent to 17 cents.

The tech sector was one of the few in the green, with Afterpay adding 0.98 per cent to $120.47 and accounting software provider Xero putting on 0.82 per cent to $138.09.

Healthcare heavyweight CSL gained 0.5 per cent to $289.87.

The Aussie dollar was fetching 75.62 US cents, 54.49 British pence and 63.43 Euro cents in afternoon trade.

Originally published as Australian sharemarket slumps in morning trade but manages to close barely changed