ASX ends up, barely, as economy slows: Wednesday 21 October

Steven Deare
(Australian Associated Press)

 

Australia’s share market finished marginally higher after another sign of a slowing economy and mixed messages on US economic stimulus.

The S&P/ASX200 benchmark index closed up 7.2 points, or 0.12 per cent, to 6191.8 on Wednesday.

The ASX200 finished below the 6200 level which has proven a psychological barrier for traders for months following the outbreak of COVID-19.

The All Ordinaries ended better by 6.3 points, or 0.1 per cent, to 6403.1.

The indices rose early but fell flat after September retail figures revealed a 1.5 per cent fall. Westpac analysts expected a 0.5 per cent improvement.

Food, household goods and online-only traders recorded falls. Clothing, footwear and personal accessories also fell.

Deep Data Analytics chief executive Mathan Somasundaram noted the data followed Tuesday’s 0.9 per cent drop in payroll jobs for the past two weeks.

“You put those things together and say that’s probably why the economy is slowing down,” he said.

Labor has argued the jobs drop came the same fortnight the Morrison government was cutting the JobKeeper wage subsidy.

Mr Somasundaram said the retail figures, and US lawmakers’ changing views of stimulus prospects, took the steam out of the ASX.

He noted the Aussie dollar improved during the session, but was impressed by the Chinese yuan.

The yuan surged to the strongest level against the US dollar in more than two years on growing optimism about China’s economy.

“If you’re picking who is winning the trade war, the currency market is telling you,” Mr Somasundaram said.

The yuan’s rise minimised the impact of the stronger Aussie dollar for most Australian industries, according to Mr Somasundaram.

On the ASX, energy topped the sectors, up 1.33 per cent.

Oil Search finished better by 3.51 per cent to $2.95.

Financials was next best, higher by 0.89 per cent.

Westpac had plenty of news. After the market closed, the bank said it would sell its 10.7 per cent stake in Zip Co through an underwritten book build to institutional investors.

Westpac is offering the shares for $6.65 each, a discount of 6.07 per cent on Zip’s closing price of $7.08.

During trade, the big-four bank said a court approved its pact with AUSTRAC to pay a $1.3 billion fine for breaching anti-money laundering rules.

Shares finished up by 0.97 per cent to $18.69. Among major rivals, ANZ finished better by 1.45 per cent to $19.60, the Commonwealth improved by 0.77 per cent to $69.67, and NAB gained 1.62 per cent to $19.50.

In mining, BHP crept up by 0.58 per cent to $36.11, Rio Tinto was better by 1.24 per cent to $95.30, while Fortescue edged up by 0.3 per cent to $16.97.

Shares plunged in one of the success stories of the pandemic, furniture trader Temple & Webster, after shareholders were disappointed by a trading update.

Chief executive Mark Coulter told an annual general meeting that first quarter EBITDA was $8.6 million, which was more than the EBITDA for the previous financial year.

Yet the figures were not enough for shareholders, who sent the price down by 17.18 per cent to $11.62.

Earlier in the US, markets closed higher after President Donald Trump said he is willing to accept a large aid bill despite opposition from his own Republican Party.

On Thursday, RBA Deputy Governor Guy Debelle will speak at a foreign exchange conference.

The Aussie dollar was buying 70.83 US cents at 1726 AEDT, higher from 70.39 US cents at the close of trade on Tuesday.

ON THE ASX

* The S&P/ASX200 benchmark index closed up 7.2 points, or 0.12 per cent, to 6191.8 on Wednesday.

* The All Ordinaries ended better by 6.3 points, or 0.1 per cent, to 6403.1.

* At 1726 AEDT, the SPI200 futures index was down by 9 points, or 0.15 per cent, to 6172.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 70.83 US cents, from 70.36 US cents on Tuesday

* 74.57 Japanese yen, from 74.24 yen

* 59.75 Euro cents, from 59.75 cents

* 54.51 British pence, from 54.31 pence

* 107.06 NZ cents, from 107.12 cents.

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