Local shares were under pressure in early trade on Tuesday, continuing the trend of recent sessions. The ASX 200 started the session with an 8 point loss, before trading at a 29 point deficit at the low point of the morning. Thereafter, the Index recovered to be flat, before weakening into lunch, when it was down 23 points.
In broad terms, Financials made the most impact, reclaiming losses posted a day earlier; CBA & Westpac (WBC) were higher by around 0.4%. Energy names led the declines in response to a 4% fall in key oil benchmarks on the prospect of increased supply. Materials names were weaker , reflecting the conversation around moderating growth in the wake of yesterday’s Chinese GDP figures.
The reopening of Libyan ports after recent closures, and comments from Russian Energy Minister Alexander Novak’s suggesting increase production weighed on oil prices in the last 24 hours. As a result Brent crude fell by US$3.49 or 4.6% to US$71.84 a barrel and the US Nymex fell by US$2.95 or 4.2% to US$68.06 a barrel in turn weighing on local energy names. Santos was 1.7% or 10 cents lower at $5.98.
Materials were lower in response to weaker metals prices overnight. London Metal Exchange (LME) metal prices fell overnight, extending a 5-week decline. The selling was informed by yesterday’s Chinese GDP figures which showed the economy grew at a forecast 6.7% annual rate in the June quarter, although the focus has been on the fact the outcome was the slowest annual growth rate in 21 months.
Shares in Asaleo Care (AHY) were 32% or 42 cents lower at 88 cents at lunch after reporting lower than forecast earnings, in addition to a profit warning. AHY manufactures personal care and hygiene products under brands including Sorbent, Handee, Purex, Libra and Deeko. AHY reported a 9% fall in 1H revenue to $267.2 Million, while underlying Ebitda for the same period fell to $46.3 Million, marking a 24% fall compared to the same time last year. The group lowered its expectations for its full year performance, forecasting FY18 underlying Ebitda in a range of $80 million – $85 million, compared to an earlier estimate of $113 million to $119 million. Higher raw material costs and increased competion in key markets were cited as influences.
Gold miner Saracen Minerals (SAR) firmed 1 cents to $2.07 after reporting record gold output, and an upward revision to FY19 guidance. The miner reported record FY18 gold production of 316,453oz, ahead of company guidance, while an all in sustaining cost (AISC) of A$1,139/oz, was within guidance. In the June quarter gold production totalled 78,930oz at an AISC of A$1,196/oz. The group raised FY19 guidance to 325-345,000oz compared to a previous estimate of 300,000oz at an AISC of A$1,050 – 1,100/oz.
The AUD/USD remained in narrow range this morning, showing some resilience in the face of declines in oil and base metal prices, along with the updated outlook for global economic growth. The International Monetary Fund (IMF), left estimates for global economic growth in 2018 and 2019 unchanged, but highlighted mounting risks to the outlook. The local unit was at 74.05 US cents lately, having slipped from 74.23 earlier.
Published by CommSec