Local shares are weaker early on Monday’s session with the ASX 200 retreating 17 points or 0.26% to 6537 heading into lunch. The top 200 index has been weighed with most sectors in negative territory, losses in the materials sector have been the largest drag while banks, utilities and industrials are making slight improvements.
Major iron ore miners are the main underperformers but losses are generally across the sector with base metal prices also falling up to 1.3%. Iron ore fell modestly as well on Friday but surged 11% over the past week to US$109.40. Fortescue Metals (FMG) is declining by the most, as it slides 4%. Rio Tinto (RIO) is down 1.8% and BHP Group (BHP) is 0.9% lower.
Lithium miner, Pilbara Minerals (PLS) is also facing downward pressure after announcing a production and sales update this morning. Lithium miners have been hit with softening demand from China of late. PLS said its spodumene (material lithium is sourced from) sales to China have been constrained, while prices have also softened, and as a result will be moderating production over June and July at its Pilgangoora operations. PLS shares are down 5.7%
Losses in the communication, energy and consumer staple sectors are also proving a weight on the local bourse. Vocus Group (VOC) is slumping 30% with AGL Energy (AGL) deciding to withdraw its $3 billion takeover offer of $4.85/share after conducting due diligence, explaining that it was not confident the deal would provide value to AGL shareholders. This comes after a Swedish private equity firm also backed out of a $3.3 billion bid for VOC a fortnight ago. AGL shares are higher by 2% on the news.
Property group, Stockland (SGP) has confirmed its FY19 distribution guidance of 27.6cps.
It will be a quiet day on the local economic front with much focus on central banks and interest rates later this week highlighted by the US Federal Reserve’s two day meeting on Wednesday and Thursday. RBA minutes are also due tomorrow with more detail expected on the reasoning for the interest rate cut of 25bps at its latest meeting. The Aussie dollar has dipped to 68.8 US cents.
So far, 1b units have changed hands worth $1.9b with 454 stocks higher, 539 lower and 388 unchanged.
Published by CommSec