ASX bears show their claws

July 14, 2020 - 3 weeks ago
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The Australian share market bears slowly sunk their claws into the Tuesday’s session after investors got a painful reminder on Monday that the coronavirus pandemic isn’t going away, after California took a U-turn on Monday after Governor Gavin Newsom ordered state-wide closure of all indoor operations at restaurants, bars, movie theatres, zoos and museums, with other businesses like gyms and hair salons being required to close their doors in counties on the state’s watch list following a recent spike in coronavirus cases.

Meanwhile, back home, fears of a New South Wales lockdown are starting to mount, after a new outbreak of COVID-19 spawning from Sydney’s Crossroads Hotel was revealed this week, with 11 venues now linked to at least 21 infections.

However, with Victoria re-entering stage three lockdowns just last week, investors are likely to be getting concerned that NSW could eventually be heading in the same way.

Global markets had welcomed the positive news at the start of this week regarding a potential coronavirus vaccine.

Besides the announcements from Companies Pfizer (PFE) and German biotech firm BioNTech (BNTX), U.S. biopharmaceutical company Gilead Sciences Inc’s said its coronavirus treatment candidate, Remdesivir, “was associated with an improvement in clinical recovery and a 62% reduction in the risk of mortality compared with standard of care.”

Meanwhile, if the ongoing studies are successful and the vaccine receives regulatory approval, Pfizer and BioNTech expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021.

The benchmark S&P/ASX 200 index closed lower after falling -36.40 points, or -0.61% to 5,941.1 points, while the broader All Ordinaries index finished down -43.8 points or -0.72% to 6,045.5.

Every sector was lower except for consumer staples, which managed to eke out a gain of +0.2%.

Afterpay was among the worst performers on the index after displaying its worst session in seven weeks after plummeting -7.2% to $66.55, while Xero dropped -4.4% to $88.76, Tyro Payments plunged -4.7% to $3.62, and Altium slipped -3.6% to $32.29 despite announcing that full-year revenue was up +10% to $273 million.

Gold stocks were weaker as the precious yellow metal retreats from the near nine-year highs at $1,815-17.

Newcrest lost -2.46%, Northern Star fell -2.29%, and Evolution Mining slipped -2.12%, while Ramelius Resources and Gold Road Resources tumbled -nearly 5%.

As iron ore prices, Fortescue Metals which lifted to a new record high gained +0.98% to an all-time high of $15.51, while BHP eked out +0.3% to $37.08 and Rio Tinto climbed +1.4% to $101.25.

Meanwhile, Whitehaven Coal rose finished up +4.1% to $1.52 after reporting a +29% rise in fourth-quarter saleable coal production, helped by higher output at its Narrabri mine.

For financials, the ‘Fab Four’ (banks) remained on the backfoot with the Commonwealth Bank slipping -0.5% to $71.73, with Westpac Banking Corp retreating -0.8% to end at $17.83, while National Australia Bank shares dropped -0.4% to $18.10 and Australia and New Zealand Banking Group fell -1.2% to $18.42, while Macquarie Group tumbled -0.53% to $121.50.

Biotech giant CSL lost -0.9% to $278.9, although Fisher and Paykel managed to climb +0.5% climb to $33.92.

Wesfarmers slipped -0.15% to $45.98, while Supermarket Coles rose +0.3% to $17.96, with Woolworths slipping -0.21% to $38.41 and a2 Milk eked out +0.2% to $19.64.

Gaming group Aristocrat rose +2.5% to $25.09, while Star Entertainment Group suffered a -2.3% fall to $2.63 after recent revelations of a potential COVID-19 cluster outbreak at its Sydney Star casino.

Treasury Wine Estate added +4% to a one-week high of $11.40, and Downer EDI rose +2.7% to $4.22 while losing -48% this year; meanwhile, TWE is down -30%.

Village Roadshow fell -4.8% to $2 after the cinema and theme park operator said it would extend exclusive talks with BGH Capital by two weeks for a second time.

The private equity firm in mid-May made a tentative offer to buy Village Roadshow for $2.40 per share but hammering out a binding deal appears to be taking longer than expected.

PolyNovo lost -1.7% to $2.30 despite getting $US15 million ($A21.6 million) in funding from the U.S. Biomedical Advanced Research and Development Authority to test its burn treatment polymer NovoSorb BTM for approval in the U.S.

Our local currency, the Australian dollar, is currently buying US$0.6944 (as of writing).

Looking ahead, traders will be waiting for the U.S. reporting season which kicks off on Tuesday evening with CitiGroup’s second-quarter results.

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