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Travel and tourism stocks sank and takeaway operators rallied after the Victorian Government announced a snap five-day lockdown to contain a Covid hotel outbreak.
The lunchtime announcement helped seal a losing week for the S&P/ASX 200. The index erased the last of its gains, falling 43 points or 0.63 per cent to a weekly loss of 34 points or 0.5 per cent.
What moved the market
The share market was already in the red on soft leads from the US, but extended its decline after the Victorian Government announced a Stage Four lockdown from midnight tonight until midnight on Wednesday. The decision was taken on medical advice after the number of confirmed infections from an outbreak from an airport hotel reached 13.
Premier Daniel Andrews said the UK variant of the virus was moving at a speed previously unseen and there were likely more infections in the community than had so far been identified.
“We are facing a new kind of enemy,” he said. “A virus that is smarter, and faster, and more infectious… This is a short, sharp blast – the same as we’ve seen in Queensland and WA – that will give us what we need to get ahead of this faster moving virus.”
Traders turned to their well-worn pandemic playbook and sold travel and tourism stocks. Qantas dived 4.8 per cent, Sydney Airport 2.1 per cent and Corporate Travel Management 2.5 per cent, Travel agent Webjet fell 3.9 per cent, Flight Centre 2.7 per cent and Helloworld 1.9 per cent. Toll road operator Transurban shed 1.7 per cent.
There were tentative rallies in companies that might benefit from the situation. Collins Foods, which operates the KFC and Taco Bell brands, gained 1.3 per cent. Domino’s Pizza edged up 0.3 per cent. Supermarkets Coles put on 0.3 per cent. Meal delivery service Marley Spoon added 1.3 per cent.
The lockdown overshadowed another big day of half-year earnings. The market has struggled for direction this week as investors sifted through a deluge of reports. Kalkine Group CEO Kunal Sawhney described the first two weeks of the season as “a mixed bag”.
“The Australian share market appears to be taking a roller-coaster ride,” he said. “The half-year earnings season has so far created a few winners, such as gold miner Newcrest Mining, telco giant Telstra, banking and insurance giant Suncorp and energy giant AGL. In contrast, earnings updates from real estate group Dexus, the road toll operator Transurban and investment manager Magellan have failed to impress investors, inducing selloffs.”
Winners’ circle
Gains at the pointy end of the market were limited. Goodman was the only company in the ASX 20 to rise more than 1 per cent. The property giant, which reports next week, edged up 1.5 per cent.
A mixed day for the miners saw Fortescue rally 0.6 per cent, while Rio Tinto sank 1.2 per cent and BHP 1.7 per cent.
Scrap metal merchant Sims advanced 1.1 per cent after increasing its North American footprint by buying assets from aluminium processor Alumisource for an upfront fee of $22.5 million, plus future performance payments. Sims expects the acquisition to increase its North American non-ferrous sales by 33,000 tonnes from 140,000 tonnes last financial year.
Doghouse
Energy companies declined with the end of crude’s nine-session winning streak. Woodside shed 1 per cent and Santos 1.6 per cent.
Commonwealth Bank faded 0.2 per cent, ANZ 0.3 per cent, NAB 0.5 per cent and Westpac 0.7 per cent. Afterpay eased 2 per cent after hitting a new intraday record yesterday.
A slump in half-year profit sent property group Mirvac down 1.7 per cent to a three-month low. Statutory profit declined to $396 million from $613 million over the same period in FY20 as the pandemic disrupted building activity.
High-flying Baby Bunting fell further from last week’s record despite strong growth and an increased dividend. The baby goods retailer raised its dividend to 5.8 cents from 4.1 cents last year after reporting a 16.6 per cent increase in sales and a 43.5 per cent jump in statutory net profit. The company’s share price eased 6.6 per cent after more than doubling this year.
Outdoor retailer Kathmandu eased 4.8 per cent on news sales at its namesake stores continued to be impacted by travel restrictions and lockdowns. A 30 per cent decline at Kathmandu was partly offset by a 21 per cent increase at the company’s Rip Curl outlets.
Mortgage insurer Gemworth slid 3.9 per cent after swinging to a full-year loss of $107.6 million. CEO and Managing Director Pauline Blight-Johnson said the result reflected increased reserving for claims resulting from the pandemic.
Crown Resorts dropped 1.6 per cent after confirming Andrew Demetriou had resigned as a director, but denying CEO Ken Barton had fallen on his sword. The company said Mr Barton was considering his position after the Bergin inquiry found Crown was unsuitable to hold a casino licence in NSW.
A Reddit-inspired flurry of interest in cannabis stocks withered following heavy declines in the US overnight. New chatroom favourite Tilray tumbled 49.7 per cent in the US in an echo of the rise and fall of GameStop and other “meme stocks”. Here, Cann Global reversed 9.1 per cent, Cann Group 11.5 per cent and Little Green Pharma 5.9 per cent.
Gold stocks were among the day’s biggest losers after the precious metal broke a three-session win run. Westgold Resources slid 7.4 per cent, Perseus Mining 5.2 per cent and Silver Lake 3.8 per cent. Newcrest lost 1 per cent.
Other markets
Japan’s Nikkei fell 0.25 per cent. Markets in China and Hong Kong remained closed for Lunar New Year holidays.
US futures deteriorated. S&P 500 futures dipped eight points or 0.2 per cent.
Oil retreated for a second session. Brent crude dropped 40 cents or 0.7 per cent to $US60.74 a barrel.
Gold dipped $4.10 or 0.2 per cent to $US1,822.70 an ounce.
The dollar eased 0.1 per cent to 77.44 US cents.
Hot today and not today
Hot today: Investors in meditech Singular Health (ASX:SHG) saw their holdings almost double in value upon debut. Shares that listed at 20 cents ran as high as 40.5 cents and finished 90 per cent ahead at 38 cents. The company specialises in making medical imaging software that operates in 3D and virtual reality. The technology has applications in surgical planning, medical education and patient education.
Not today: Drilling contractor Mitchell Services (ASX:MSV) skidded 20.2 per cent after advising it had terminated a five-year contract with a client over unpaid invoices. The company said it was owed around $8.5 million in outstanding receivables and intended to recognise an impairment of $7.3 million in its second-quarter report. A recovery process had been set in motion to attempt to recover the full amount owing.
