After a strong month of record recovery in April, the first trading session of May began and ended on a low note. Overnight negative US economic data on unemployment rates and consumer spending sparked a sell off. That negative sentiment flowed through the Australian market today. It opened in the red, and saw steady declines throughout the day. The volatile markets for oil surged again overnight but the surge wasn’t enough to bolster the Energy sector which retracted over 6 per cent today.
The S&P/ASX200 index
At the closing bell the S&P/ASX 200 index closed 277 points lower to finish at 5,246.
Over the week, the market has gained 0.1 per cent.
Dow futures are suggesting a fall of 253 points.
S&P 500 futures are eyeing a dip of 30 points.
The Nasdaq futures are eyeing a fall of 88 points.
And the ASX200 futures are eyeing a fall of 300 points on Monday morning.
Local economic news
CoreLogic data shows that Australian housing activity plummeted in April, while housing values stayed steady. Although most regions recorded a rise in home values through April, the national monthly pace of growth more than halved, dropping from 0.7% in March to 0.3%. The capital city markets generally showed a weaker performance relative to the regional markets.
The ABS released its producer price indexes for the March quarter. Demand excluding exports rose 0.2 per cent for the March quarter, following a 0.3 per cent rise the previous quarter.
AiGroup published the Performance of Manufacturing Index for April. Australian PMI was down 17.9 points (seasonally adjusted terms) to 35.8. This indicates that Australian manufacturing contracted at its worst pace since April 2009. It is the largest month-to-month fall in this index in the history of the series, dropping from 53.7 points the previous month. Manufacturers cited a range of COVID-19 issues in April, with the most prevalent including: no new sales due to shutdowns; major customers cancelling orders; supply chain problems with inter-state freight movements, and delays; and increased prices for raw materials.
Ord Minnett rates pharmaceutical and biotech company, Ecofibre (ASX:EOF) as a buy with a 12 month price target of $3.61. Over the 9 months to March, Ecofibre’s revenue shot up 73 per cent. Growth was underpinned by the Ananda Health business. The company has announced the commercial launch of anti-microbial face masks using its proprietary hemp infused fibres. The broker believes this will offer short-term revenue but more importantly, relationship and branding opportunities in the pharmacy industry. Shares in Ecofibre (ASX:EOF) closed 2.1 per cent lower at $2.79.
Maurice Blackburn Lawyers has launched a shareholder class action law suit against Australia’s biggest wine company, Treasury Wine Estates (ASX:TWE) alleging the wine giant misled the market for 18 months before it finally came clean about its declining US business. The class action is being brought on behalf of shareholders who purchased an interest in the company between 30 June 2018 and 28 January 2020. Treasury denies all allegations of wrongdoing and intends to vigorously defend the proceedings. This follows a separate law suit launched last month against the company by law firm Slater and Gordon. Shares in Treasury Wine Estates (ASX:TWE) closed 6.9 per cent lower at $9.45.
Lifestyle and holiday communities provider, Ingenia Communities Group (ASX:INA) has successfully completed the institutional component of its $150 million placement.
Medical diagnostic company, Sonic Healthcare (ASX:SHL) has government secured a contract under which it will conduct sample collection and testing for COVID-19 in residential aged care facilities.
Origin Energy (ASX:ORG) has established a strategic partnership with UK retailer Octopus Energy.
South32 Group Operations (ASX:S32) has extended its airline services contract with Alliance Aviation Services (ASX:AQZ) for a further ten year (2020 to 2030).
Best and worst performers of the day
The best performing sector was Utilities losing 2.2 per cent while the worst performing sector was Materials, shedding 6.8 per cent.
The best performing stock in the S&P/ASX 200 was Janus Henderson Group (ASX:JHG), rising 8.2 per cent to close at $26.60. Shares in Fisher and Paykel Healthcare Corporation (ASX:FPH) and Resmed (ASX:RMD) followed higher.
The worst performing stock in the S&P/ASX 200 was Austal (ASX:ASB), dropping nearly 20 per cent to close at $2.69. Shares in Monadelphous Group (ASX:MND) and Virgin Money UK (ASX:VUK) followed lower.
Japan’s Nikkei has lost 2.8 per cent, Hong Kong’s Hang Seng and China’s Shanghai Composite are closed.
Wrapped up our four trading days this week higher: The Dow Jones added 2.3 per cent, The S&P 500 added 2.6 per cent and the tech heavy Nasdaq gained 2.9 per cent.
Commodities and the dollar
Gold is trading at US$1,676 an ounce.
Iron ore price rose 1.9 per cent to US$84.04.
Iron ore futures are pointing to a rise of 2.5 per cent.
Light crude is US$0.32 higher at US$22.17 a barrel.
One Australian dollar is buying 64.61 US cents.