The Australian sharemarket has had a wild start to the day, with all this morning’s gains erased by noon after a top White House trade adviser said the China deal ‘is over’. This news at ~11am AEST dragged the market into negative territory, with the ASX 200 down 0.15 per cent to 5,935.5 at lunch. At their best, local equities were up by as much as 0.9 per cent on the open following a positive lead from Wall Street last night, but quickly slumped to a decline of 0.9 per cent on the US news.
White House trade advisor, Peter Navarro said the decision was made to end a China trade deal because of how China informed the US about coronavirus. While the market’s kneejerk reaction could very well be premature considering this has not been confirmed and could have been taken out of context, the market’s reaction was swift. This news not only wiped out share gains, it pushed the Aussie dollar and US futures lower while the greenback and gold pushed higher.
The banks are sliding by ~1.5 per cent at lunch, which is weighing most heavily on the broader market. Most other sectors are tracking slightly lower so far today.
Woolworths (WOW) is down 0.65 per cent after providing an update to the market. The supermarket chain expects EBIT of between $3.2-$3.25bn in FY20, which is lower than last year’s $3.29bn result. WOW anticipates the total cost of worker underpayments to be around $75m higher than previous estimates and also plans on developing two new distribution centres in Moorebank, NSW. WOW expects this to lead to redundancies.
AMP said the sale of its AMP Life business to Resolution Life has received all regulatory approvals and expects the transaction to wrap up early next week (30 June). AMP shares are up 9 per cent. Harvey Norman (HVN) is up 3.8 per cent after flagging a 20 per cent lift in profit before tax for the 11 months to 31 May 2020.
Tourism related stocks started well, but have since fallen away with the rest of the market heading into lunch. All the following stocks have also lost ground over the past two weeks with COVID19/border closure concerns continuing. Qantas (QAN), Air New Zealand (AIZ), Auckland Airport (AIA), Webjet (WEB), Flight Centre (FLT), Corporate Travel (CTD) and Crown (CWN) are all under pressure.
The price of oil has improved by 1.8 per cent, lifting for a third day and hitting a three-month high in the process in overnight trade. A major US broker has raised its forecasts for oil prices in 2020 due to a faster recovery in demand and OPEC supply cuts. Gold prices have edged higher by 0.8 per cent to a near seven and a half year high, taking the gains in just three months to around 20 per cent.
2.6bn shares have changed hands so far, worth $3.2bn. 530 stocks are up, 600 down and 345 are unchanged.
Published by CommSec