The ASX suffered its worst daily fall in almost two months – but the steep dip was bound to happen after a stellar run.
The Australian sharemarket had its worst daily fall in almost two months, weighed down by the banks and big miners, but analysts weren’t surprised.
The benchmark S&P/ASX200 index closed 0.94 per cent lower at 7511, while the All Ordinaries Index sank 0.97 per cent to 7773.3.
It was the second straight day of falls, following a stellar rally including 10 consecutive months of gains.
“But it’s important to step back from the noise of the daily movements and just remind ourselves we’ve had a number of record highs hit over the past fortnight,” CommSec analyst Steve Daghlian said.
“We’ve had a remarkable run in the circumstances as we deal with the pandemic, of course, and all the lockdowns, which if anything have just intensified over the last few days.”
OMG chief executive Ivan Tchourilov said the steep dip was bound to happen.
“Despite record earnings for the reporting period so far, it’s impossible to escape the effects of increasing Covid cases and slipping confidence rates for both consumers and businesses,” he said.
“In response, the Reserve Bank has left the door open to ramp up bond buying again, but added flexibility means they’ll likely hold off unless their hand is forced.”
ANZ backtracked 1.08 per cent to $28.42 and National Australia Bank retreated 0.97 per cent to $27.45 while Commonwealth Bank traded ex-dividend and fell 3.45 per cent to $99 – back below the $100 level breached in May.
CBA’s drop made it a buyers’ market, Mr Tchourilov said, with the bank the most bought stock for the day among his company’s traders.
Westpac declined 1.32 per cent to $25.45 after providing a third quarter update, reiterating margins for the second half were expected to be lower than the first while full-year expenses would be higher than in 2019-20.
The bank also said there was a relatively small number of new loan repayment deferrals related to recent lockdowns.
Magellan Financial Group slumped 10.15 per cent to $46.20 after reporting a big drop in full-year performance fees.
Rio Tinto weakened 1.79 per cent to $116.37, Fortescue slid 1.33 per cent to $21.58 and BHP erased 1.42 per cent to $51.33 ahead of its full-year results.
“There is an expectation of the fact that iron ore prices doubled to record highs over the past year, (which) should help lift its profit and also dividend,” Mr Daghlian said.
Oil Search suitor Santos reported a 22 per cent rise in half-year revenue and a return to profitability, with oil and gas production lifting to record levels.
The company declared an interim dividend of 5.5 US cents, up 162 per cent.
RBC Capital Markets analyst Gordon Ramsay said the result was “a beat across the board” versus his company’s estimates.
“Santos did a good job on keeping a lid on production and operating costs, plus net interest expense and tax were below our forecast,” Mr Ramsay said.
Santos shares dropped 0.8 per cent to $6.16, largely due to three straight days of oil price falls, Mr Daghlian said.
Small appliance maker Breville Group slumped 8.97 per cent to $30.36 despite reporting record full-year sales, saying the working from home trend and its expansion into France, Portugal, Italy and Mexico had offset the negative impact of an erratic supply chain.
Ord Minnett said the result was slightly below its forecast, but in line with Breville’s guidance.
While Breville did not provide an outlook for 2021-22, the company pointed to supplier cost increases, parts challenges and logistics delays, Ord Minnett noted.
“Investors have taken a bearish outlook after the company slashed its dividend and failed to issue guidance,” Mr Tchourilov said.
“CEO Jim Clayton, when talking about next year’s expectations, used the word ‘transitional’, which is now a buzzword for ‘lukewarm’ that’s caught on in the past couple of months, which is not how investors like their coffee.”
Shopping Centres Australasia Property Group dipped 1.13 per cent to $2.62 after reporting a more than 440 per cent surge in full-year net profit, primarily due to an increase in the fair value of its investment properties.
“Over the last 12 months, our convenience-based centres have benefited from the shift to shopping locally,” chief executive Anthony Mellowes said.
“Our anchor tenants have experienced strong sales growth and turnover rent has increased.
“Specialty tenant sales recovered quickly following the easing of restrictions.”
Nine-owned real estate media company Domain gained 4.7 per cent to $4.89 after posting a 66 per cent full-year net profit rise, saying it was positioned to take full advantage of an improving property market.
It also announced a 4 cents per share dividend – its first since February last year – and said national listings over this financial year so far were up slightly on last year.
“We remain confident in the resilience of the market, as evidenced by consistent patterns of sharp rebounds when restrictions ease,” Domain said.
UBS initiated coverage of Australian supermarkets, slapping a 12-month price target on Woolworths of $39 and $16.50 on rival Coles.
Woolworths added 0.4 per cent to $41.19 and Coles declined 0.92 per cent to $18.33.
The Aussie dollar was buying 73.03 US cents, 52.83 British pence and 62.03 Euro cents in afternoon trade.
Originally published as Australian sharemarket tumbles after remarkable recent rally, dragged lower by banks and big miners
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