(Australian Associated Press)
The Australian share market has pulled back after two days of gains, as lower oil prices dragged down energy producers and as warnings mounted of worsening economic conditions because of the coronavirus pandemic.
The S&P/ASX200 benchmark index finished Wednesday down 21.4 points, or 0.39 per cent, to 5,466.7 points, after having risen as much as 44.9 points at the open.
The All Ordinaries index closed down 19.2 points, or 0.35 per cent, to 5,523.3.
“We’re really just trading off the US futures,” which were pointing to a drop of about 0.5 per cent on Wall Street, said David Bassanese, chief economist of Betashares.
The normal correlation between the ASX and the US market has broken down and economic data is being ignored, he said.
The US market is actually trading at higher forward earnings ratio than before the pandemic, he said.
“It’s quite extraordinary,” Mr Bassanese said.
The market is pricing in a V-shaped recovery, although “there’s a lot to get through” until it will be clear whether that will happen, he said.
Five of the ASX’s 11 sectors posted modest gains on Wednesday but the market was dragged by the energy sector and the heavyweight financial and mining sectors, as well as blood products giant CSL.
Smaller stocks outperformed the market, with the Small Ordinaries index of 100 small and micro-cap companies gaining 0.2 per cent and the ASX20 index of Australia’s 20 biggest companies falling 0.5 per cent.
Oil producers Woodside Petroleum, Santos, Oil Search and Beach Energy fell by between 3.7 and 6.2 per cent after oil prices dropped overnight despite an agreement by the OPEC+ cartel forged over the weekend to cut production.
Australia’s biggest ASX-listed company, CSL, fell 0.6 per cent to $324.15, while Sonic Healthcare gained 3.9 per cent to $25.32.
Most of the big banks were higher with ANZ gaining 0.4 per cent to $16.85, NAB down 0.6 per cent to $16.64 and Westpac dipping 0.1 per cent to $16.29.
But Commonwealth Bank fell 1.1 per cent to $62.07 and insurer QBE dropped 3.5 per cent after completing its $1.2 billion institutional placement.
In the mining sector, BHP fell 0.7 per cent to $31.43, Rio Tinto dropped 1.2 per cent to $89.78 and Fortescue Metals fell 1.5 per cent to $11.40.
Copper-gold miner OZ Minerals gained 2.5 per cent after reporting that its new Carrapateena mine in SA was ramping up ahead of schedule and the COVID-19 lockdowns hadn’t hampered production.
Rare earth miner Lynas gained 5.2 per cent after reporting it had asked the Malaysian government to designate its processing plant as a critical operation during that country’s coronavirus lockdown so it could restart work there.
Goldminers were mixed, with Newcrest climbing 1.7 per cent while Northern Star dropped 0.8 per cent and Evolution dipped 0.4 per cent.
Junior explorer Chalice Gold Mines soared 83 per cent to $1.035 after confirming a significant high-grade nickel-palladium discovery at its Julimar project 70km east of Perth.
Infant formula producer Bubs gained 5.2 per cent to 91.5 cents after reporting its highest quarterly gross revenue thanks to booming demand in China for infant formula.
A2 Milk closed 3.6 per cent higher to $18.10 – breaking the $18 barrier for the first time ever.
Funeral home business Invocare finished up 2.0 per cent to $11.51 after resuming trade after a $200 million placement to shore up its balance sheet during the lockdowns.
The Australian dollar was buying 63.54 US cents, down from 64.10 US cents at the close of markets on Tuesday.
ON THE ASX:
* The benchmark S&P/ASX200 index finished on Wednesday down 21.4 points, or 0.39 per cent, at 5,466.7 points
* The All Ordinaries closed down 19.2 points, or 0.35 per cent, at 5,523.3 points
* At 1713 AEST, the SPI200 futures index was down three points, or 0.04 per cent, at 5,459 points
One Australian dollar buys:
* 63.54 US cents, from 64.10 US cents on Tuesday
* 68.09 Japanese yen, from 69.04 yen
* 57.99 euro cents, from 58.66 cents
* 50.59 British pence, from 51.03 pence
* 105.37 NZ cents, from 105.02 cents.