Markets Live, Tuesday 28 July, 2020 – The Sydney Morning Herald

That’s it from us today at Markets Live!

Thanks for your company and, as always, thanks for the comments. (Especially the ones about grilled cheese).

Alex Druce and Lucy Battersby will be back tomorrow.

See you then!

The ASX closed 0.4 per cent lower on Tuesday as sudden movements in a very high gold price encouraged investors to take profits at the top of the market.

The local market opened higher and reached 6113 points before lunch, but was dragged down in the afternoon by news from Westpac, the spread of coronavirus in Victoria, and a sharp drop in the gold price.

The gold rally cooled on Tuesday, but only after touching a new record high.

The gold rally cooled on Tuesday, but only after touching a new record high. Credit:Dominik OsswaldBloomberg

The ASX200 closed at 6020.5 and has now been swapping from a gain to a loss every day for 14 sessions in a row.

While volumes were the strongest in three weeks, the Australian dollar is back up to 15-month highs, which could be discouraging some off-shore investors.

On the other hand, the weaker US dollar has been fuelling demand in cheapened US stocks, according to Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

“It is hard to predict the short-term market direction in such choppy conditions,’’ she said.

“Hope for more monetary and fiscal stimulus keep investors on track for buying equities, however, the company fundamentals and the economic situation don’t improve at the desired speed. This means that the country and company debts are exploding without a concrete positive impact on businesses and economies”.

Early on Tuesday Westpac revealed more breaches of anti-money laundering regulations and announced a new chief financial officer. The stock closed 1.5 per cent lower at $17.46, a four-week low. Perpetual dropped 5 per cent to $31.91 after a trading halt in which it announced a $465 million purchase of a US fund manager.

The financial sector declined by 0.7 per cent, but both information technology and energy declined more than 1 per cent. The healthcare sector seemed to be suffering from news Victoria would defer elective surgery as the state deals with rising coronavirus cases. CSL started the day with a $4 gain, but ended it $3.24 lower at $272, a decline of 1.2 per cent.

“It has just been a bit risk-off,’’ said portfolio manager at Tribeca Investment Partners, Jun Bei Liu.
“We thought it would be a much more bullish day. We have had a really good run in the last little while. Everyone wants to sit back and see what companies will say in reporting season.’’

Investors were lured to changes in the gold price, which hit the highest prices ever recorded on Tuesday at $US1977.31 per ounce, or $2,716.80 in the local currency, before dropping sharply in the early afternoon and prompting sell-offs in Australian gold miners.

Newcrest Mining opened $2 higher and then lost those gains to close 0.1 per cent higher. Resolute Mining ended the day 4.9 per cent lower at $1.37, Silver Lake dropped 3.4 per cent to $2.57, and Saracen Minerals declined 2.9 per cent to $6.29.

Iron ore miners like BHP and Rio Tinto enjoyed strong performances, however, and Fortescue gained 3.2 per cent to $16.89, after hitting an all-time high of $17.10 earlier in the day.

Miner Rio Tinto has flagged the potential for a significant new copper and gold district in Western Australia’s Pilbara after providing its first indication of the size of the resource at its Winu deposit and revealing it has struck another promising gold-dominant mineralisation nearby.

The nation’s second-largest mining group is eager to develop the Winu project in WA after drilling discovered an estimate 503 million tonnes of ore averaging 0.4 per cent copper equivalent including a higher-grade component of 188 million tonnes at 0.68 per cent copper equivalent. Rio Tinto’s studies found the mineralisation supported the development of a relatively shallow open-pit mine.

Rio Tinto hopes copper production can begin at its new Pilbara project by 2023.

Rio Tinto hopes copper production can begin at its new Pilbara project by 2023.

Stephen McIntosh, Rio’s head of growth and innovation, on Tuesday said the company was targeting first production in 2023 and was planning a “small-scale, start-up” operation that focused on Winu’s higher-grade core.

“We are basically contemplating a small starter pit, concentrating on the higher grades, shallower mineralisation, very much doing this in a more agile and more innovative approach,” he said. “We are very pleased to be able to do this and do it quickly.”

Also on Tuesday, Rio Tinto revealed the discovery a new zone of gold-dominant mineralisation two kilometres east of Winu – a prospect called Ngapakarra – as well as a number of other encouraging drilling results in close proximity to the maiden Winu resource. Rio said these provided “further encouragement” about the potential for the development of multiple ore bodies within one system.

Shares in ASX-listed IVF providers were subdued this afternoon, with Monash IVF closing flat at 55 cents while Virtus Health was down 3.5 per cent at $2.74.

This is despite the sector has been spared from the latest elective surgery procedure shutdowns in Victoria, with state government confirming women with planned procedures would be able to complete them due to the time-sensitive nature of IVF treatments.

The IVF sector was subdued on Tuesday.

The IVF sector was subdued on Tuesday. Credit:ninevms

Monash IVF chief executive Michal Knaap said this was a good result because “time is of the essence’” for IVF patients.

However, the business is still seeing a backlog of treatments from when all elective procedures were shut in April. Some women have waited two or three months due to pent-up demand.

“I expect [demand to ease] within the next couple of months – when we would get all our volumes back on plan,” he said.

The Australian sharemarket closed 23.7 points, or 0.4 per cent, lower on Tuesday at 60200.5 points.

There were 56 companies higher, 132 lower, and 12 flat on the ASX 200 at the end of trade. Volumes improved on the two-week daily average with 716 million shares traded. That’s the highest in nearly three weeks.

The biggest gainers for the day were:

  • Credit Corp +8.8%
  • Nufarm +8.1%
  • ALS +5.7%
  • GUD +4%
  • Boral +4%

The biggest declines were:

  • Perpetual -5.1%
  • Resolute Mining -4.9%
  • Waypoint REIT -4.8%
  • Nearmap -4.2%
  • Challenger -3.8%

The real estate sector, particularly shopping centre owners, is pretty weak today. I pulled up the sector’s performance since the start of the year and it is down 23 per cent since January.

The worst performers by far are shopping centre operators. Scentre Group shares have fallen the most, down 44 per cent since January, followed by a 32.6 per cent fall in Mirvac, and 45.5 per cent drop in Vicinity Centres, the owner of Chadstone in Melbourne.

However, Goodman Group shares have completely bucked the trend, gaining nearly 25 per cent since the end of 2019. National Storage, which was a takeover target before the pandemic, BWP Trust and Waypoint are also slightly higher.

Overall, 17 out of 21 real estate stocks are now lower than they were in January.

With the end of today’s session fast approaching, the ASX has lost its gains and is now sitting 16 points lower at 6028, a fall of 0.3 per cent. Wall Street futures have flattened during the day and are currently pointing to a small decline in the Dow Jones index overnight.

Materials and industrial sectors are still higher, thanks to iron ore miners and Boral, but gold miners have been sold off with Saracen Minerals down 3.2 per cent, and Evolution Mining down 1.5 per cent.

The financials sector is dragging away the most points, followed by healthcare, consumer discretionary, real estate and energy. Information technology has the biggest under-performance with a fall of 1.2 per cent.

Since midday CSL has fallen from $276.40 down to $273.28, a decline of 0.8 per cent. Westpac shares were positive in the morning, but dropped at 11.30am after the company revealed more anti-money laundering breaches and its chief financial officer would be leaving. The stock price is now 1 per cent lower at $17.54.

Given the number of toasted sandwiches fuelling working from home arrangements, it is no surprise Breville’s share price has reached all time highs today of $26.83, although it has since pulled back to $26.36.

The company has not released any news since last week, when it advised full year results will be delivered on 13 August. Analysts are expecting to see full year pre-tax profits of about $76.8 million for 2019-20, up from $67.4 million in 2018-19.

Toasties. The quick lock down working from home food.

Toasties. The quick lock down working from home food. Credit:Christopher Pearce

The stock has buy recommendations from Morgan Stanley, Bell Potter, EL&C Baillieu, and Credit Suisse, but Morningstar analyst Angus Hewitt released a ‘sell’ recommendation with a $16.50 price target on Monday.

Breville shares are currently trading above all but one analyst target prices, with Morgan Stanley’s Joseph Michael expecting the stock to reach $28.

Having been up by 1.2 per cent, the boards of the benchmark ASX 200 were flashing red in mid-afternoon trade.

The index was 0.1 per cent down for the day at 6039.2 at 2.30pm after losing ground steadily since lunchtime.

Gold has also cooled down and is now flat for the session at $US1945 an ounce. It earlier shot up to a record high $US1980.

The big iron ore miners are still ahead and helping the materials sector to outperform the wider index. BHP was up 1.8 per cent at $38.06 and Rio Tinto climbed 1.2 per cent to $104.12. Fortescue Metals touched a new record high $17.10 and was still up 3.4 per cent at $16.91.

The financials are down 0.5 per cent, with Westpac’s losses at 1.3 per cent for the day. The company’s stock was worth $17.50 after it flagged 175,000 transactions that it failed to report to the financial crime regulator AUSTRAC, and a further 365,000 reports that may have included incomplete or inaccurate information.

US futures are flat. Asian markets are higher.

Australia’s workers’ compensation system was never part of the royal commission into financial services, but it is now clear it should have been.

Evidence of doctor shopping, agents knocking back legitimate claims to earn bonuses and delays and denials of medical treatment are just a few of the tactics being used in a system that has totally lost its way.

Chris Iliopoulos had her workers comp claim rejected.

Chris Iliopoulos had her workers comp claim rejected. Credit:The Age 

Instead of acting as a safety net for sick and injured workers, the $60 billion system has become a gravy train for insurance agents, consultants and so many other hangers on.

And while the winners are winning big, workers are becoming sicker and employers are facing rising premiums.

Check out Adele Ferguson’s investigation into workers’ compensation here