The ASX 200 is a touch lower at lunch, with the index down just 0.17 per cent to 5,550. This snaps a 4.5 per cent, 3-day winning streak for our market after hitting a near 10-week high on Tuesday. Despite the decline, the Aussie market was down by as much as 1 per cent this morning, so has bounced off intraday lows.
US markets fell by as much as 1.5 per cent overnight (follows a near 4 per cent lift a day earlier). Reports that Moderna’s COVID19 vaccine trial failed to produce sufficient data to assess its success was a weight.
On the economic front, a preliminary report of retail spending in April was worse than expected, declining by 17.9 per cent following an 8.5 per cent surge in March. Although this was the largest monthly decline on record, most retailers are lifting on the ASX today.
Gains from technology and industrials are helping minimise losses on Wednesday.
Mining and energy stocks are shaking off further advances in commodity prices, with the sector taking a breather following an 11 per cent surge in just three sessions. The price of oil rose by 2.1 per cent last night (up 17 per cent in three days). The expectation for more demand for fuel as economies reopen and signs of healthy buying from China has helped. The price of gold rose by 0.7 per cent overnight (near a 7.5 year high and up 18 per cent in two months on safe haven buying). Iron ore has continued to rally, lifting by almost 2 per cent overnight, is up 8 per cent this week and 17 per cent over the fortnight.
New Zealand based building products company, Fletcher (FBU) will cut 10 per cent of its workforce (1,000 in New Zealand and 500 in Australia) due to COVID-19’s significant impact on its operations. Level 4 restrictions in NZ resulted in a $55m loss in April mainly due to employee costs.
Australian Agricultural Company (AAC) swung to a $15.2m operating profit in FY20 ($22.9m loss in FY19). The beef producer was helped by Wagyu sales, cattle prices and cost reductions. It is working with Government and industry stakeholders to potentially divert some product to other markets outside China. China buys ~15 per cent of its beef.
BHP temporarily paused iron ore operations at its Jimblebar mine in WA due to concerns of some low-level injuries at the site in recent weeks. BHP said that operations have recommenced and has had no impact on production.
1.9bn shares have changed hands so far worth $2.5bn. 639 stocks are up, 407 down and 324 are unchanged.
Published by CommSec