Aus participation rate hits all time high: Aus shares steady at noon, holding fresh highs

Market Reports

by Jessica Amir

The Australian share market opened higher is holding steady at Midday, making gains earlier in the session with selling in Afterpay Touch Group (ASX:APT) and Challenger (ASX:CGF) capping gains. However, the local bourse is holding firm at those fresh new 11.5-year highs we hit on Tuesday.

Afterpay (ASX:APT) selling comes as AUSTRAC (Australian Transaction Reports and Analysis Centre) last night requested Afterpay to appoint an external auditor to carry out an audit in respect of its AML/CTF compliance. The shares have reacted quite negatively even though the buy now pay later company proactively engaged with AUSTRAC previously. Afterpay says its model has several features to help to control money laundering and terrorism financing risk, with spending limits of up to $1,500 per transaction. 

The S&P/ASX 200 index is 0.1 per cent or 4 points higher at 6,548. On the futures market the SPI is 2 points higher.

Local economic news

Australia's trend participation rate hit an all-time high, 66 per cent in May 2019, according to Australian Bureau of Statistics (ABS). The result was also better than expected. It comes as the rate rose 0.4 per cent.

Meantime, the headline seasonally adjusted unemployment rate held steady at 5.2 per cent last month, while the consensus was, the rate would drop to 5.1 per cent.

The data also tells us the number of employed people rose by 42,000 and this was better than expected (17,500).

Company news

Investment management company, Challenger Limited (ASX:CGF) shares are trading 7 per cent lower after its results will be weaker in FY20 factoring in the RBA cash rate drop targeted. As a result, its group normalised net profit before tax should be between the range of $500 million to $550 million. This is sharply less than what’s expected for this year’s net profit before tax, which Challenger says will sit at bottom end of its guidance range ($545 million to $565 million), and this is roughly where consensus sits at $544 million. The consensus is based on the average of forecasts from 10 analysts (including Bell Potter, Credit Suisse, Citi, Deutsche, Goldman Sachs, JP Morgan, Macquarie and UBS). Shares in Challenger Limited (ASX:CGF) are trading 7.2 per cent lower at $7.09 at noon.

Australian property development company, Stockland (ASX:SGP) says it’s expecting to see reduced income growth and cap rate growth, driving negative revaluations for its commercial property division’s retail new leases and renewals. It’s targeting negative 3.5 per cent. While its residential department is tipped to see profit in line with Stockland’s expectations, and its retirement living will see an uptick in developments and established sales. All in all, its targeting FY19 distribution growth on 4 per cent (at, 27.6 cents) and that’s at the bottom end of target payout ratio. Shares in Stockland (ASX:SGP) are trading 2 per cent lower at $4.37 at noon.

Small cap and emerging electric vehicle company, Australian Mines (ASX:AUZ) shares jumped 18.2 per cent after announcing its flagship project is set to generate $5 billion in free cashflow. It also announced it will see a longer mine life of 30 plus years. On top of that, it also increased its ore reserves and says additional mine life total revenue will grow 44 per cent to $13.3 billion. Shares in Australian Mines (ASX:AUZ) are trading 18.2 per cent higher at $0.03 at noon.

Best and worst performers

The best-performing sector is S&P/ASX Health Care, adding 2.1 per cent, while the worst performing sector is S&P/ASX Info Tech, shedding 2.1 per cent.

The best performing stock in the S&P/ASX 200 is Bingo Industries Limited (ASX:BIN), rising 4.6 per cent to $2.06, followed by shares in Syrah Resources Limited (ASX:SYR) and CSL (ASX:CSL).

The worst performing stock in the S&P/ASX 200 is Afterpay Touch Group Limited (ASX:APT),dropping 9.5 per cent to $23.20, followed by shares in Challenger Limited (ASX:CGF) and Harvey Norman Holdings Limited (ASX:HVN).

Asian markets

Japan’s Nikkei has lost 0.5 per cent, Hong Kong’s Hang Seng has shed 1.1 per cent and the Shanghai Composite has lost 0.3 per cent.

Commodities and the dollar

Gold is trading at US$1,336 an ounce.
Iron ore last traded at US$106.60 (Iron ore is holding at record high, buoyed by concerns over tight supply and strong demand)
Iron ore futures are pointing to a fall of 0.2 per cent.
One Australian dollar is buying 69.22 US cents.