Big banks drop: Aus shares flat at noon

Market Reports

by Kathy Skantzos

The Australian share market dropped sharply at the open mainly due to the big banks falling but has recovered with a rise in the health sector and is now tracking almost 0.1 per cent higher at noon. The Covid-19 restrictions in Victoria have hit travel companies including Qantas (ASX:QAN) and Flight Centre (ASX:FLT). However, Alliance Aviation (ASX:AQZ) shares are up after expanding its fleet. Monadelphous (ASX:MND) shares dropped after Rio Tinto (ASX:RIO) filed a writ against the miner and Tabcorp (ASX:TAH) is also down after flagging asset impairments of up to $1.1 billion.

The S&P/ASX 200 index is 3 points higher at 5,931. On the futures market the SPI is 7 points higher.

Local economic news

The Australian Performance of Manufacturing Index rose by 2 points to 53.5 points in July, Australian Industry Group (AiG) reported today. The rise was primarily driven by the food & beverage and machinery & equipment sectors. All other sectors are reporting difficult trading conditions due to the impact of the pandemic.

Australian housing values continue to drift lower, with CoreLogic’s home value index falling 0.6 per cent in July as the Covid-driven housing downturn moves through a third consecutive month of decline. Melbourne and Sydney saw the largest slide in house prices, while Canberra saw a rise.

Australian job advertisements are climbing back up, with ANZ’s figures showing a 17 per cent increase for the month of July. However, year on year, job ads are down 34 per cent, undoubtedly due to Covid.

Broker moves

Credit Suisse rates Origin Energy (ASX:ORG) as Neutral as the fourth quarter produced a good result from LNG, with production in line with guidance despite Origin Energy curtailing production.
The company's share of APLNG distributions was at the top end of guidance. The main change to the broker's FY21 estimates is a reduction in operating expenditure being carried forward.
Residential demand uplift because of increased working from home did not eventuate and declines in retail electricity demand continue. Target is reduced to $5.70 from $6.00.
Shares in Origin Energy (ASX:ORG) are trading 1.86 per cent higher at $5.47.

Company news

SEEK (ASX:SEK) will dump its final dividend in an effort to preserve capital to fund its long-term growth strategy, the company announced in a statement this morning. Last year, investors received a final payout of 22 cents a share. Shares in SEEK (ASX:SEK) are trading 2.3 per cent lower at $21.16.

Alliance Aviation (ASX:AQZ) has expanded its fleet with the acquisition of 14 aircrafts from US company Azorra Aviation for the total price of US$79.4 million. Shares in Alliance Aviation (ASX:AQZ) are trading 8.3 per cent higher at $3.38.

Best and worst performers

The best-performing sector is Health Care gaining 2.7 per cent, while the worst performing sector is Financials losing at 1.8 per cent.

The best performing stock in the S&P/ASX 200 is Cochlear (ASX:COH) rising 4.5 per cent to $198.86, followed by shares in Viva Energy Group (ASX:VEA) and Netwealth Group (ASX:NWL).

The worst performing stock in the S&P/ASX 200 is Credit Corp Group (ASX:CCP) dropping 7.9 per cent to $17.49, followed by shares in Monadelphous (ASX:MND) and Flight Centre (ASX:FLT).

Commodities and the dollar

Gold is trading at US$1,973 an ounce.
Iron ore price is flat at US$110.58.
Iron ore futures are suggesting a rise of 3.3 per cent.
One Australian dollar is buying 71.31US cents.