US growth concerns weigh on ASX: Aus shares 1.2% lower at noon, biggest drop since Jan

Market Reports

by Jessica Amir

We’ve seen the Australian share market take its biggest one day drop since the beginning of the year, after the top 500 stocks on Wall Street also had their worst day since January amid global growth concerns, with the S&P500 losing 1.9 per cent, the tech-heavy Nasdaq falling 2.5 per cent and the Dow Jones losing 1.8 per cent. 

Bank stocks like Citi fell 4 per cent, while Goldman Sachs, Morgan Stanley and Bank of America lost about 3 per cent. In the US, we saw the spread between the 3-month Treasury bill yield and the 10-year note rate turn negative for the first time since 2007, inverting the curve, which is considered a recession indicator.

As tech stocks were the hardest hit in the US, local tech investors have also hit the hardest, with the ASX tech sector down, 3.3 per cent, with Energy leading the major sectors lower after the oil price slipped from its 2019 highs, falling 1.6 per cent to US$59.04 a barrel.

Meantime the precious safe haven (gold) commodity went the other way, rising almost 0.5 per cent to US$1,319 with Gold players like Newcrest Mining (ASX:NCM), Resolute Mining (ASX:RSG) and Saracen Minerals (ASX:SAR) rising at least 1.5 per cent.

The S&P/ASX 200 index is 73 points or 1.2 per cent at 6,122. On the futures market the SPI is 76 points lower.

Broker calls

St Barbara (ASX:SBM) has been upgraded to a buy by Goldman Sachs, after the gold producer decided not to proceed with its hydraulic hoisting solution, known as Gwalia Mass Extraction (GMX), which simplifies the company’s outlook. GS revised its 12-month target price to $3.90 per share, implying a 21 per cent upside. Meantime SBM downgraded Gwalia FY19 production guidance by 10-15 koz (thousand ounces) due to impacts from construction of its extension project.

Company news

One of the largest providers of aged care in Australia, Regis Healthcare (ASX:REG) has advised for its half-year results to 31 December 2018, it’s now included a payment of about $10.4 million from a government funding increase. It comes as the Federal Government announced a one off payment of $320 million for residential aged care, which means it should receive $1,800 per patient for its 5,800 permanent residents. Half of the payment will be received in FY19. Its FY19 NPAT will be in the range of $47 to $51 million and its 2H FY19 EBITDA will be broadly in line with its 1H FY19. Shares Regis Healthcare (ASX:REG) are trading 2.9 per cent lower at $3.40 at noon. Year-to-date, it shares have gained 29 per cent, but year-on-year it’s trading 4.8 per cent lower.

Investment management firm, Pinnacle Investment Management (ASX:PNI) has issued new shares as part of its dividend reinvestment plan (DRP) for two of its directors. The company was recently added into the ASX200 in March and has $50.2 billion in funds under management (FUM). Shares in Pinnacle Investment Management (ASX:PNI) are trading 5.9 per cent lower at $5.25 at noon. Year-to-date, it’s shares have gained 20 per cent and year-on-year it’s trading 25 per cent higher.

Best and worst performers

The best-performing sector is S&P/ASX Real Estate Investment Trusts, adding 0.3 per cent, followed by S&P/ASX Telco Services, S&P/ASX Utilities, S&P/ASX Consumer Discretionary, S&P/ASX Consumer Staples, S&P/ASX Health Care, S&P/ASX Industrials, S&P/ASX Materials, S&P/ASX Financials while the worst performing sector is S&P/ASX Energy, shedding 2.6 per cent.

The best performing stock in the S&P/ASX 200 is Newcrest Mining Limited (ASX:NCM), rising 2.4 per cent to $26.00, followed by shares in Evolution Mining Limited (ASX:EVN) and Resolute Mining Limited (ASX:RSG).

The worst performing stock in the S&P/ASX 200 is Eclipx Group (ASX:ECX), dropping 8.7 per cent to $0.68, continuing to trade at all time lows for the fourth trading session. Following is shares in Altium Limited (ASX:ALU) and Ausdrill Limited (ASX:ASL).

Commodities and the dollar

Gold is trading at US$1,313 an ounce.
Iron ore price rose 1.7 per cent to US$85.96 (propped by up the cyclone)
Iron ore futures are pointing to a rise of 0.2 per cent.
One Australian dollar is buying 70.73 US cents.