ASX recovers after early dip; A2 Milk shares plunge as Westpac rallies

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

The numbers

The Australian sharemarket overcame a dip in early trading to finish higher for a seventh consecutive session on Monday, as consumer staples and mining stocks fell amid a wave of corporate earnings reports.

The ASX 200 Index edged up 9.3 points, or 0.1 per cent, to 7980.4 following a small rise in Wall Street’s latest trading session on Friday.

Wall Street’s benchmark index made it seven-straight days of gains.Credit: Bloomberg

The majority of sectors lost ground, with the consumer staples sector dipping 0.9 per cent. The utilities sector gained 1.7 per cent.

The lifters

Medical wholesaler EBOS Group was the biggest large-cap advancer, up 2.9 per cent, followed by Evolution Mining, up 2.7 per cent.

Westpac shares gained 2.5 per cent after the bank said its profits rose to $1.8 billion in the June quarter. National Australia Bank shares gained 1.2 per cent, while Commonwealth Bank and ANZ shares also both ticked up slightly. Energy giants Origin (up 2.5 per cent) and AGL (up 1.8 per cent) made solid gains.

The Australian dollar was up, trading at just under US67¢.

The laggards

A2 Milk was the biggest large-cap decliner, with its shares plummeting 18.7 per cent after the company flagged challenging conditions for its infant formula market in China. It also forecast mid-single-digit revenue growth in FY25 – below analysts’ expectations – citing supply chain issues affecting sales.

Shares in bathroom products company Reece Group shed 3.9 per cent after the company reported year-on-year profit growth of 8 per cent in a tough market for home renovations.

Property giant Lendlease’s shares dropped 0.8 per cent after it reported a 10 per cent decline in revenue, to $9.4 billion, in 2023-24, and a post-tax loss of $1.5 billion.

The property group said it would focus on building up its core Australian operations with an emphasis on luxury residential projects, while it implements its strategy to sell overseas assets and simplify its business model.

Bluescope Steel shares fell 3.1 per cent as it reported a slide in profit after tax of $805.7 million.

BHP shares were 0.7 per cent lower, while Rio Tinto shares tracked down slightly, and Fortescue shares fell 1.9 per cent.

The lowdown

Tobias Yao, portfolio manager at Wilson Asset Management, said “absent short-term supply issues”, A2 Milk had delivered a strong set of results, and was simply experiencing “growing pains”.

He said negative outcomes in the company’s earnings report included pushing back a break-even target for A2’s US business by a year, and questions over what to do with $NZ968.9 million in cash.

On Wall Street on Friday, the S&P 500 Index rose 0.2 per cent for a seventh straight gain and pulled back within 2 percentage points of its record high set last month. The Dow Jones Industrial Average and the Nasdaq Composite Index also each gained 0.2 per cent.

US treasury yields eased in the bond market after a couple of mixed reports on the US economy. One showed home builders broke ground on fewer projects last month than forecast, which threw some cold water on the market.

Optimism had been rising earlier in the week after a flurry of better-than-expected economic reports on everything from inflation to sales at US retailers.

Tweet of the day

Quote of the day

“The brand has got a lot of good value. That was a big thing for publishers, authors, being Australian and not giving the business to Amazon. I’m taking on the CEO role. I’ve got my sleeves rolled up. This is not a side investment for me. I’m playing an active role in this,” said Booktopia’s new owner, Shant Kradjian.

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Westpac’s profits climbed to $1.8 billion in the June quarter, chief executive Peter King revealed, as he noted many businesses were seeing lower demand for their goods as cost-of-living pressures bite.

With AP

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