The Australian sharemarket is slipping for the first time this week, with the ASX 200 down 0.4 per cent to 6,115.7 due mainly to losses across the mining sector. Keep in mind that this follows our market hitting a two-month high on Tuesday and was only ~0.3 per cent away from hitting the best levels in five months. Large declines in some commodity prices overnight, the US putting an end to a seven-day winning streak, Auckland re-entering Stage 3 restrictions and a small spike in COVID-19 cases in Victoria have all received attention this morning.
US stocks lost 0.8 per cent, putting an end to the longest winning streak of 2020. Markets initially rose on news of a potential Russian coronavirus vaccine, which was offset by a US Senator saying stimulus talks had hit a stalemate.
Most of the major banks are higher at lunch, while Commonwealth Bank (CBA) is down by 0.6 per cent following the release of its FY20 results. Cash profit – the preferred measure of bank profitability – fell by 11.3 per cent to $7,296m due to a significant ~$2.5bn in loan impairments. CBA said that 135,000 home loans were deferred (8 per cent of loans) and 59,000 business loans (15 per cent of total balances). Net profit rose by 12 per cent to $9,634m thanks to the sale of some assets and divestments which boosted the bottom line by ~$2bn. CBA’s Net Interest Margin slipped by 2bps to 2.07 per cent and was impacted by lower interest rates. A 98c per share final dividend was declared, lower than the $2 paid out in March (interim dividend) and well below the $2.31 paid out last year. CBA has met APRA’s guidance to keep payouts to below 50 per cent of profits (CBA paid out 49.95 per cent). CBA shares are significantly outperforming its peers Year-to-Date.
Heavy losses from the mining sector (particularly gold miners) are weighing on the local market. The price of gold fell by close to 5 per cent overnight; the sharpest decline in seven years. This seemed to be mainly due to a lift in 10-year bond yields in the US, which tends to make gold look less attractive to some market participants.
Of companies posting results this morning, Seek (SEK) is being hit hardest, down ~10 per cent. The job search company reported a net loss of $111.7m over the year, due largely to its minority investments in Brazil and Mexico and a drop in job listings. As previously flagged, SEK will not pay investors a dividend. Transurban (TCL) and Computershare (CPU) are both down on weaker profit results.
4.1bn shares have changed hands so far today worth a light $3.6bn. 355 stocks are up, 859 are down and 304 are flat.
Published by CommSec