Markets Live, Wednesday 22 July, 2020 – The Sydney Morning Herald

ASX investors nursed a mighty hangover on Wednesday as the local bourse plunged from four-month highs to register its worst session in two weeks.

A buoyant Australian dollar may also have played a role as the market endured a rocky morning-after following Tuesday’s rise.

Australian shares plunged on Wednesday. Credit:Louie Douvis

Nonetheless, Wednesday’s 81.2 point, or 1.3 per cent, decline to 6075.1 was but a portion of the previous session’s $46 billion gain, meaning the benchmark ASX 200 remains well ahead for the week.

Index heavyweights BHP and CSL alone accounted for a significant portion of Wednesday’s decline, dropping 3.4 per cent and 3.6 per cent respectively.

TMS Capital’s Ben Clark said the session perhaps indicated the market had been carried away with the extension of JobKeeper and JobSeeker stimulus packages to the end of March, and hopes or a coronavirus vaccine.
“Probably a bit too much euphoria,” Mr Clark said.

Daily coronavirus updates from Victoria and NSW were also a bucket of cold water, with the market fading further on the grim new statistics, he added.

There were 502 new COVID-19 cases confirmed for the country, well ahead of the previous single-day record of 469 back in March.

“That said, I think a decent pull-back in the market is looking less likely to me,” Mr Clark said.

“The Jobkeeper announcement is a major one for me … and with the work we’re seeing done on these (medical trials), hopefully, it’ll get us through to when we can have a vaccine.”

He also noted that the strengthening of the Aussie dollar against the greenback could have fueled a decline for export-reliant mining companies and offshore growth stocks on Wednesday.

The Aussie rose throughout the day and at one point hit a new 15-month high of US71.52c.

The materials sector dropped 1.3 per cent. BHP sagged while Rio Tinto and Fortescue Metals also lost heavily, down 1.5 per cent and 1.9 per cent respectively.

Goldminers, however, shone brightly on fresh nine-year highs for the precious metal.

Newcrest, Northern Star, Evolution, and Saracen each added between 0.6 per cent and 1.5 per cent.

Resolute Mining was the best performer on the index with a 12.9 per cent rise to $1.40 after it locked in its prior full-year production guidance.

The financials finished 0.6 per cent lower with each of the big four banks in the red. NAB led losses with a 0.8 per cent decline to $18.11.

Energy stocks outperformed all day thanks to improved oil prices and was the only sector to close ahead, adding 0.6 per cent.

That is all from us today.

Thank you for your time and your comments. Alex will be back in the morning for another day of live action in financial markets.

Good night.

ASX investors nursed a mighty hangover on Wednesday as the local bourse plunged from four-month highs to register its worst session in two weeks.

A buoyant Australian dollar may also have played a role as the market endured a rocky morning-after following Tuesday’s rise.

Australian shares plunged on Wednesday. Credit:Louie Douvis

Nonetheless, Wednesday’s 81.2 point, or 1.3 per cent, decline to 6075.1 was but a portion of the previous session’s $46 billion gain, meaning the benchmark ASX 200 remains well ahead for the week.

Index heavyweights BHP and CSL alone accounted for a significant portion of Wednesday’s decline, dropping 3.4 per cent and 3.6 per cent respectively.

TMS Capital’s Ben Clark said the session perhaps indicated the market had been carried away with the extension of JobKeeper and JobSeeker stimulus packages to the end of March, and hopes or a coronavirus vaccine.
“Probably a bit too much euphoria,” Mr Clark said.

Daily coronavirus updates from Victoria and NSW were also a bucket of cold water, with the market fading further on the grim new statistics, he added.

There were 502 new COVID-19 cases confirmed for the country, well ahead of the previous single-day record of 469 back in March.

“That said, I think a decent pull-back in the market is looking less likely to me,” Mr Clark said.

“The Jobkeeper announcement is a major one for me … and with the work we’re seeing done on these (medical trials), hopefully, it’ll get us through to when we can have a vaccine.”

He also noted that the strengthening of the Aussie dollar against the greenback could have fueled a decline for export-reliant mining companies and offshore growth stocks on Wednesday.

The Aussie rose throughout the day and at one point hit a new 15-month high of US71.52c.

The materials sector dropped 1.3 per cent. BHP sagged while Rio Tinto and Fortescue Metals also lost heavily, down 1.5 per cent and 1.9 per cent respectively.

Goldminers, however, shone brightly on fresh nine-year highs for the precious metal.

Newcrest, Northern Star, Evolution, and Saracen each added between 0.6 per cent and 1.5 per cent.

Resolute Mining was the best performer on the index with a 12.9 per cent rise to $1.40 after it locked in its prior full-year production guidance.

The financials finished 0.6 per cent lower with each of the big four banks in the red. NAB led losses with a 0.8 per cent decline to $18.11.

Energy stocks outperformed all day thanks to improved oil prices and was the only sector to close ahead, adding 0.6 per cent.

From Reuters:

A 23-year-old law student has filed a lawsuit against Australia’s government alleging it has failed to disclose climate change-related risks to investors in the country’s sovereign bonds, in the first such action against the Australian government.

According to the litigation filed in the Federal Court in Melbourne on Wednesday, Kathleen O’Donnell claims investors who buy Australian government bonds should be made aware of the risks the country faces due to climate change that might make it difficult for Australia to pay back its debt.

The litigation comes amid a global call for a “green” recovery in the wake of the coronavirus pandemic and as many large investment managers pledge their commitment for net zero carbon emissions by 2050 across their entire portfolio.

“Australia is materially exposed and susceptible” to climate change risks, according to the statement filed with the Federal Court.

“Accordingly, (a) those risks are material to an investor’s decision to trade in exchange-traded Australian government bonds (e-AGBs) and (b) an investor is entitled to be informed of those risks.”

O’Donnell is seeking declaration that the government breached its duty of disclosure and an injunction restraining further promotion of e-AGBs until it complies.

Australia has more than $600 billion of sovereign bonds on issue, enjoying a coveted ‘AAA’ rating from all three major ratings agencies.

Climate change-related disclosures have become more mainstream globally in the past couple of years, with stake holders expecting better disclosures and transparency on climate-related risks.

Global financial authorities are also pushing banks to improve transparency on their exposure to climate-change risks, arguing that disclosures on climate exposure are a prerequisite for market participants – an issue referenced in O’Donnell’s litigation.

“As a promoter, the Commonwealth (government) owes a duty of utmost candour and honesty to investors who acquire or intend to acquire e-AGBs,” according to the statement.

“The Commonwealth breached its duty as a promoter by…failing to disclose any information about Australia’s climate change risks.”

The ASX 200 ended the day 81.2 points lower at 6075.1 points, a decline of 1.3 per cent.

Biggest gains:

  • Resolute Mining up 12.9 per cent to $1.40
  • Challenger up 7.1 per cent to $4.68
  • Beach Energy up 4.7 per cent to $1.55
  • Oz Minerals up 4.2 per cent to $13.53
  • Silver Lake Resources up 3.7 per cent to $2.53

Biggest declines:

  • Mesoblast down 6.8 per cent to $3.45
  • ProMedicus down 6.2 per cent to $24.49
  • PolyNovo down 5.1 per cent to $2.24
  • Avita Theapeutics down 5 per cent to $6.48
  • Inghams Group down 4.8 per cent to $3.37

The Aussie has jumped up to US71.52¢ in the last few minutes, taking it to the highest it has been since April 2019.

It is also stronger against the British pound, rising to 56.17 pence, a level that was last seen in August 2019.

Today the Japanese Yen, US Dollar, and British Pound are all weaker against the Euro. In fact, the Euro has hit an 18-month high against the greenback following the European Union’s agreement on a COVID-19 stimulus package.

Australian shares have pulled back from a session low but remain deep in the red, with index giants CSL and BHP down more than 3 per cent and accounting for a sizeable portion of those losses.

The ASX 200 was down 88.1 points, or 1.4 per cent, at 6068.2 at 3.40pm AEST. The index is still ahead 0.5 per cent for the week thanks to Tuesday’s exuberant performance.

Barring something unforetold, it is extremely likely that the market will continue its run of flip-flopping sessions.

The ASX 200 has alternated between positive and negative sessions for 11 trading days and has not had back-to-back gains since July 2 and 3.

Nonetheless, the local bourse has still added 2.8 per cent for the month.

Listed chicken farmer Inghams is temporarily closing a processing plant in Victoria after five employees tested positive for the coronavirus.

The Thomastown site has been temporarily closed with all employees requested to self-isolate at home.

Inghams has temporarily closed its Thomastown processing plant. Credit:Eddie Jim

The closure is not expected to materially impact the business results of Ingham’s Group for FY2021.

“It is imperative that we continue do everything possible to ensure the health and safety of our people, communities and to assist in controlling the spread of the Coronavirus,” group chief executive Jim Leighton said.

Ingham’s other sites across Australia remain in operation and the company’s New Zealand operations remain unaffected. Inghams products remain available to consumers around Australia.

The firm’s share price took a big hit on Wednesday amid a wider market slump. Inghams was 4.8 per cent lower at $3.37 by 3.15pm AEST.

The company in February cut its interim dividend to 7.3 cents after first-half net profit fell 70 per cent to $26.2 million amid rising feed costs.

The local sharemarket’s losses have accelerated into the afternoon with the ASX 200 down 1.6 per cent at a session low 6056.5.

The energy sector and goldminers are among the rare bright spots in an otherwise sea of red.

The index still has a way to go before it erases Tuesday’s stimulus-driven gains, but investors have still managed to wipe $29 billion from the market.

CSL and BHP accounted for a large chunk of the market’s decline

The blood giant fell 3.8 per cent to $282.44 and BHP was down 3.3 per cent at $37.54.

Gold miner Resolute is by far the best performer on the ASX 200 in afternoon trade, up 11.7 per cent at a more than nine-month high of $1.39.

The company is soaring on nine-year high gold prices and a quarterly update that locked in full-year production guidance of 430,000 ounces.

Gold miner Resolute is soaring on Wednesday. Credit:AAP

June quarter gold production came in at 107,200 ounces, down 3 per cent from the March quarter but still slightly better than RBC estimates.

All-in sustaining costs were also better than expected at $US1033 an ounce, even though they were higher than the $US1007 reported in the March quarter.

Among the other gold miners, Newcrest was 1 per cent higher at $34.02, Northern Star was up 0.5 per cent at $15.92, Evolution gained 0.3 per cent to $6.20, Saracen was up 0.5 per cent to $6.16, and Regis Resources added 1.7 per cent to at $5.85.

A dour morning for local stocks has continued into the afternoon with the benchmark ASX 200 down 1.2 per cent.

The bourse hit a session low of 6076.9 just after midday and was last down 71.8 points at 6084.5. The index yesterday had its best session in more than five weeks and closed at a new four-month high.

The blue-chip CSI300 was well ahead at the lunchtime break. Credit:AP

Health stocks are down by a collective 3.2 per cent, dragged lower by blood giant CSL, while tech stocks have taken a 2.3 per cent tumble. Financials are also a weight, down 0.4 per cent.

Commonwealth Bank is 0.5 per cent lower at $74.04 and NAB is 0.7 per cent down at $18.14.

The materials sector has sagged 1.6 per cent, though the gold miners are adding a bit of sparkle. The price of the yellow metal is at a nine-year high of above $US1855 an ounce.

Energy stocks are the only sector ahead, adding 1.4 per cent on an overnight oil price rise.

Across Asia, the CSI300 is 1.4 per cent higher and the Shanghai Composite has gained 1.2 per cent. The Hang Seng and KOSPI are flat and the Nikkei is slightly lower.

US futures are up 0.4 per cent and point to early gains for Wall Street tonight.

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