Heartbreaking job data drags market lower: Aus shares close 0.9% lower

Market Reports

by Katrina Bullock

The market sank at the open, was hit by job data that Prime Minister, Scott Morrison described as “heartbreaking”, and finished the day 0.9 per cent lower. In Australia the number of known coronavirus cases stands at 7,370 and the number of deaths remains unchanged at 102. The Prime Minister addressed parliament house today calling this “another terribly hard and difficult day for Australians” and noting that "we have a long road ahead” but that the government can see the light at the end of the tunnel.

The S&P/ASX200 index

At the closing bell the S&P/ASX 200 index closed 55 points lower to finish at 5,937.

Futures market

Dow futures are suggesting a fall of 153 points.
S&P 500 futures are eyeing a dip of 16 points.
The Nasdaq futures are eyeing a fall of 33 points.
And the ASX200 futures are eyeing a 60 point fall tomorrow morning.

Economic news

Data released by the Australian Bureau of Statistics today shows that Australia's population is growing, largely as a result of overseas migration. The population grew by 1.4 per cent during the last calendar year. Natural increase accounted for around 40 per cent of annual population growth, while overseas migration accounted for the remaining 60 per cent.

ABS data released today revealed that the national unemployment rate has risen from 6.4 per cent in April to 7.1 per cent in May. Prime Minister Scott Morrison labelled the job data as “heartbreaking” and “devastating”. Over 227,000 people lost their job between April and May and monthly hours worked fell 0.7 per cent during the month. Treasurer Josh Frydenberg revealed that females and young people were the hardest hit by the employment changes. Around 2.3 million Australians (1 in 5) have been affected by job losses and hour reductions during the covid pandemic, with further job losses expected in September when the government’s Job Keeper stimulus is scheduled to end. Around 3 million Australians are currently receiving the government's JobKeeper payment. Treasury estimates that around 1.5 million Australians will be out of work during the first half of 2020 as GDP free falls around 10 per cent.

Broker moves

Ord Minnett has downgraded lithium producer Galaxy Resources (ASX:GXY) from an accumulate to a hold, with a 12 month price target of 90 cents. This follows the recent appreciation of Galaxy’s share price. Shares in Galaxy Resources (ASX:GXY) closed 0.6 per cent lower at $0.85.

Company news

Ship builder Austal (ASX:ASB) has announced that the United States Department of Defense has awarded Austal USA a modification to a previously awarded ship contract. The modification provides Austal with a total potential additional value of around US$43.4 million. Work is expected to be complete by June 2021.Shares in Austal (ASX:ASB) closed 3.7 per cent higher at $3.36.

Westpac Banking Corporation (ASX:WBC) is selling its remaining holding in Pendal Group (ASX:PDL) via an underwritten institutional offer.

Air New Zealand (ASX:AIZ) expects an underlying loss of around $120 million (before tax) for the 2020 financial year.

Australia’s largest homewares e-commerce company, Temple & Webster (ASX:TPW) has seen its YTD EBITDA soar 668 per cent higher to 7.1 million for the 2020 financial year (ended 31 March 2020).

Shares in payment solution provider, Splitit Payments (ASX:SPT) soared over 40 per cent higher today after the company signed a multi-year agreement with Mastercard (NYSE:MA) which will allow it to integrate its instalment solution with Mastercard’s suite of technology.

Best and worst performers of the day

The best performing sector and the only one in the green was Utilities adding 0.3 per cent while the worst performing sector was Consumer Discretionaries, shedding almost 2 per cent.

The best performing stock in the S&P/ASX 200 was Parenti Global (ASX:PRN), rising 4.3 per cent to close at $1.46. Shares in Austal (ASX:ASB) and QBE Insurance Group (ASX:QBE) followed higher.

The worst performing stock in the S&P/ASX 200 was Vocus (ASX:VOC), dropping 6.3 per cent to close at $3.00. Shares in CSR (ASX:CSR) and Polynovo (ASX:PNV) followed lower.

Asian markets

Mixed: Japan’s Nikkei has lost 0.4 per cent, Hong Kong’s Hang Seng has lost 0.5 per cent and the Shanghai Composite has gained 0.1 per cent.

Commodities and the dollar

Gold is trading at US$1,727 an ounce.
Iron ore price is flat at $104.90.
Iron ore futures are pointing to a fall of 1 per cent.
Light crude is US$0.38 down at US$38.02 a barrel.
One Australian dollar is buying 68.68 US cents.