RBA reaffirms targets: Aus shares close 0.7% lower

Market Reports

by Katrina Bullock

After a strong start in early trade, the ASX200 slumped mid-morning on the ABS’s announcement that the February trade balance had fallen to around $4.4 billion. It continued to float lower over the afternoon as the RBA announced a potential wind back of its government bond purchases on the secondary markets.

The S&P/ASX200 index

At the closing bell the S&P/ASX 200 index closed 35 points or 0.7 per cent lower to finish at 5252.

Futures markets

Dow futures are suggesting a rise of 171 points.
S&P 500 futures are eyeing a rise of 26 points.
The Nasdaq futures are eyeing a lift of 54 points.
And back home the ASX200 futures are eyeing a 0.2% point fall tomorrow morning.

Economic news

The Reserve Bank of Australia Governor, Philip Lowe released a statement today following the RBA’s board meeting. He reaffirmed the targets for the cash rate and the yield on 3-year Australian government bonds of 25 basis points. He says the yield on 3-year government bonds is now around the target level set by the Board. Since this target was introduced, the Bank has purchased around $36 billion of government bonds in secondary markets, including bonds issued by the states and territories. The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band. The bank reiterated its economic outlook for the local saying it expected a very large economic contraction to be recorded in the June quarter with unemployment expected to increase to its highest level in many years.

The Australian Bureau of Statistics released data on international trade in goods and services for the month of February. In seasonally adjusted terms, the balance was a surplus of $4,361 million. That’s a $384 million decrease compared to the surplus in January 2020.

Broker moves

Citi rates Flight Centre Travel Group (ASX:FLT) as a buy, with a 12 month price target of $12.50. The broker believes Flight Centre's balance sheet crisis is over thanks to an impending $700 million equity raising, $200 million of additional debt facilities, a potential $60 million asset sale, and cost savings from a 50 per cent reduction in global store footprint. Shares in Flight Centre Travel Group (ASX:FLT) are trading nearly 12 per cent higher at $9.99.

Company news

Auckland International Airport (ASX:AIA) has completed the bookbuild for its 1 billion New Zealand dollar placement. The company says the placement was strongly supported, attracting bids well in excess of the $1 billion New Zealand dollar total offer amount from investors in both local and offshore markets. The Placement was fully subscribed at the price determined in the bookbuild of $4.66 New Zealand per share. Settlement of the Placement is expected to occur on 14 April 2020 for the ASX and on 15 April 2020 for NZX. This comes on the heels of the company’s announcement that it will also be undertaking a NZ$200 million share purchase plan to eligible retail shareholders. Shares in Auckland International Airport (ASX:AIA) closed 9.2 per cent higher at $5.32.

The GPT Group (ASX:GPT) today announced that all properties in the GPT Wholesale Office Fund and the GPT Wholesale Shopping Centre Fund have been independently revalued as at 31 March 2020. The value of the properties was downgraded by approximately $183 million, representing a decline in book value of approximately 2 per cent.

Tabcorp Holdings (ASX:TAH) is to temporary stand down over 700 employees in businesses where there is no work as a result of COVID-19 shutdowns.

PolyNovo (ASX:PNV) reports sales for the March 2020 quarter were 166 per cent greater than the March 2019 quarter.

QBE Insurance Group (ASX:QBE) has appointed Jason Harris as Chief Executive Officer, succeeding Richard Pryce who intends to retire at the end of this year.

Best and worst performers of the day

The best performing sector was Information Technology adding 2.7 per cent while the worst performing sector was Utilities, shedding 2.7 per cent.

The best performing stock in the S&P/ASX 200 was Polynovo (ASX:PNV), rising 15.8 per cent to close at $1.94. Shares in Flight Centre Travel Group (ASX:FLT) and EML Payments (ASX:EML) followed higher.

The worst performing stock in the S&P/ASX 200 was Mayne Pharma Group (ASX:MYX), dropping 7.8 per cent to close at 29 cents. Shares in HUB24 (ASX:HUB) and Fisher & Paykel Healthcare Corporation (ASX:FPH) followed lower.

Asian markets

Higher: Japan’s Nikkei has added around 2 per cent, Hong Kong’s Hang Seng has added 1.4 per cent and the Shanghai Composite has gained nearly 2 per cent.

Commodities and the dollar

Gold is trading at US$1,661 an ounce.
Iron ore price is flat at US$83.30.
Iron ore futures are pointing to a fall of 0.3 per cent.
Light crude is US$0.65 up at US$26.73 a barrel.
One Australian dollar is buying 61.66 US cents.