ASX flat as Guzman y Gomez shares make stellar debut

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

The numbers

The Australian sharemarket flatlined on Thursday, weighed down by underperforming consumer staples, healthcare and technology companies. Mexican fast-food chain Guzman y Gomez made a stellar trading debut after its $335 million initial public offering.

The S&P/ASX 200 Index closed 0.3 points, or less than 0.01 per cent, lower at 7769.4 points, with five of the 11 industry sectors in the red.

Australian investors took their lead from Europe as Wall Street was closed overnight for the Juneteenth holiday.Credit: Reuters

The lifters

Shares in Guzman y Gomez closed at $30 a share, having surged 36.4 per cent after they commenced trading on the ASX at midday. The company had sold $335.1 million worth of its shares at $22 each in its IPO, having upped its initial float from $242.5 million.

Real estate investment trusts (up 0.5 per cent) and financials (up 0.3 per cent) were the strongest sectors. Scentre shares rose 1.6 per cent and GPT Group was up 2 per cent. QBE shares rose 0.3 per cent, rival insurer Suncorp was up 1.2 per cent and insurance broker Steadfast gained 1.1 per cent. The country’s biggest bank, CBA, added 0.6 per cent, helping to lift the financials sector.

Engineering services company Worley saw its shares rise 1.4 per cent, coal miner Yancoal was up 2 per cent, and rail freight operator Aurizon gained 1.4 per cent to round up the biggest large-cap advancers.

The laggards

Consumer staples (down 0.4 per cent) were among the worst performers, with Coles (down 1.2 per cent) and Endeavour Group (down 0.4 per cent) leading the sector lower.

The healthcare sector (down 1 per cent) was also weaker, with shares of market heavyweight and hearing implants maker Cochlear losing 4.8 per cent.

Tech companies (down 0.5 per cent) declined as data centre operator NEXTDC slid 1.6 per cent.

Meridian Energy (down 4.7 per cent) was the worst large-cap performer, while James Hardie Industries (down 2.1 per cent) and Mercury Nz (down 2 per cent) were also among the biggest large-cap decliners.

The lowdown

IG Australia market analyst Tony Sycamore said it was a mixed day for some of the country’s largest sectors.

“The materials sector remains unloved, trading near a seven-month low as an uncertain outlook in China casts a shadow,” he said. “Elsewhere, it’s been a mixed day for the big banks after the ASX 200 financial sector hit a fresh seventeen-year high earlier this week.”

Sycamore said the S&P/ASX200 drifted lower without the positive influence of Wall Street. The US sharemarket was closed for trade for the Juneteenth public holiday, a day after the S&P 500 hit its 31st record high of 2024, powered by another surge in artificial intelligence bellwether Nvidia, now the world’s most valuable company.

Meanwhile, European stocks and US equity futures paused as traders sought fresh catalysts to extend the latest technology-driven gains.

The pan-European Stoxx 600 slipped 0.2 per cent after two days of gains, while bond yields across the euro area edged higher.

Oil prices were little changed, while iron ore added 1 per cent to $US107.30 a tonne in Singapore.

Despite a recent wobble driven by French political tensions, European stocks still stand about 2 per cent off their latest record highs.

Wall Street, meanwhile, has been lifted by the continued AI frenzy and resilient economic growth that should continue to support corporate earnings, especially in the technology sector. UK data added to signs inflation is slowing across the developed world, potentially allowing central banks to cut interest rates.

“We are in a soft landing scenario, central banks have started easing policy or will start to ease soon, and we may be facing a wave of positive productivity shocks thanks to technology,” said Benoit Anne, head of investment solutions at MFS Investment Management. “Put all that together, and you have a very supportive environment for global equities.”

While US Treasuries were not trading on Wednesday, government bond yields across Europe edged higher. UK 10-year government borrowing costs rose three basis points, and the pound firmed, despite data showing inflation had slowed to the Bank of England’s 2 per cent target.

The data likely rules out a rate cut at the BOE’s Thursday meeting, according to Zara Nokes, global market analyst at JPMorgan Asset Management.

Investors also kept an eye on developments in France, which got a scolding from the European Union for breaking the bloc’s deficit and debt rules.

French 10-year bond yields rose almost four basis points, while the spread relative to their German peers stayed at the widest since 2017 amid concerns that the upcoming snap election will result in a win for far-right groups with high-spending policies.

Tweet of the day

Quote of the day

“This potential practice of deliberate market manipulation, if substantiated, is perhaps one of the most serious interferences by supermarkets in the efficient and fair functioning of fresh produce markets,” said the National Farmers Federation’s Horticulture Council as farmer groups implore the competition watchdog to scrutinise whether supermarkets are deliberately pre-ordering too much fruit and vegetables from growers to ensure supply and drive down prices.

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with Bloomberg

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