Costa Group wipes out 2 years of gains: Aus shares see red for 2nd day, 0.74% lower

Market Reports

by Jessica Amir

The Australian share market opened lower as expected following more negative leads from Wall Street and remained underwater, with the local bourse closing in the red for the second day, with mostly all our sectors closing with a loss, except Telcos.

Costa Group Holdings (ASX:CGC) shares were the biggest drag on the market today, shedding 27 per cent (about two years of gains) after the horticultural company announced its results will be weaker than expected for the CY.

On Wednesday the Dow Jones briefly fell over 400 points on the 10-year Treasury note yield hitting the lowest level seen since September 2017 before rebounding.

At the closing bell the S&P/ASX 200 index closed 0.7 per cent lower or 48 points lower to finish at 6,392.

Futures market

Dow futures are suggesting a rise of 53 points.
S&P 500 futures are eyeing a rise of 8 points.
The Nasdaq futures are eyeing a lift of 24 points.
And the ASX200 futures are eyeing a 34-point fall tomorrow.

Economic news

A major leading indicator for home building (council approvals to build new homes) fell by 4.7 per cent in April (seasonally adjusted terms), falling more than the 3 per cent dip expected. Albeit, it was not as steep as the prior March reading, which saw approvals fall 13.4 per cent.

It comes as approvals fell 19.1 per cent in Tasmania, 16.1 per cent in Victoria, by 6.7 per cent in Western Australia and by 3.3 per cent in South Australia.

Company news

Patry’s (ASX:PAB) lead drug PAT-DX1 has reduced breast brain metastases and also enhanced radiation therapy. It comes as it announced results from pre-clinical animal data. Breast cancer is a leading cause of cancer death in women, and about 1.7 million new cases are diagnosed each year across the globe. Tumors that lack all three receptors are referred to as “triple negative breast cancer (TNBC)”, and this subtype makes up 15- 20 per cent of all breast cancer cases and is the most aggressive and difficult to treat. And up to 50 per cent of patients who have “triple negative breast cancer (TNBC)” develop brain metastases, or brain cancer. Shares in Patrys (ASX:PAB) closed 7.4 per cent higher at $0.03. This year, its share have gained 7.4 per cent.

Small cap, Orthocell (ASX:OCC) has received firm commitments to raise $10.6 million , to ramp up the development of CelGro for nerve regeneration and also drive the commercialisation of other key products. It comes as almost a month ago its shares hit a new three year high, surging 360 per cent on 8 May, after announcing it successfully regenerated damaged nerves in its first four patients, as part of its trial. Shares in Orthocell (ASX:OCC) closed 5.4 per cent lower at $0.44. This year this shares have gained 210 per cent.

Costa Group (ASX:CGC) advised its results will be below its prior expectations with its NPAT (NPAT-SL) guidance for CY18 being $57 to $66 million on the back of deteriorating factors. It comes as Driscoll’s grower network has started to see high waste in the raspberry variety from a condition called ‘crumbly fruit’. That has resulted in low yields and labour inefficiencies. While in the mushroom category, it was hit by unexpected and unseasonably warm weather, weaker demand and price softness.

Superloop (ASX:SLC) has announced the subsea cable system between Australia and South East Asia has been commissioned and is ready to be used by AARNet, Google, Indosat Ooredoo, Singtel, SubPartners and Telstra (ASX:TLS), improving telco services between Australia and the Southeast Asian markets.

Restaurant Brands (ASX:RBD) has its sales rise by $2.8 million or 1.6 per cent in the first quarter of the financial year (12 weeks to 20 May 2019) to $182.8 million. Hawaii saw the highest same sales growth of 8.4 per cent, followed by Australia with 6.0 per cent growth and New Zealand with 4.9 per cent.

Best and worst performers of the day

The best performing sector was Telco Services adding 1.1 per cent while the worst performing sector was Reits, shedding 1.8 per cent.

The best performing stock in the S&P/ASX 200 was Syrah Resources (ASX:SYR), rising 13.5 per cent to close at $1.27. Shares in Blackmores (ASX:BKL) and Estia Health (ASX:EHE) followed higher.

The worst performing stock in the S&P/ASX 200 was Costa Group Holdings (ASX:CGC), dropping 27.6 per cent to close at $3.75. Shares in Elders (ASX:ELD) and NRW Holdings (ASX:NWH) followed lower.

Asian markets

Japan’s Nikkei has lost 0.3 per cent, Hong Kong’s Hang Seng has lost 0.5 per cent and the Shanghai Composite has lost 0.7 per cent.

Commodities and the dollar

Gold is trading at US$1,278 an ounce.
Iron ore price rose 0.1 per cent to US$106.18.
Iron ore futures are pointing to a fall of 0.6 per cent.
Light crude is US$0.08 down at US$59.06 a barrel.
One Australian dollar is buying 69.29 US cents.

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