The Australian share market opened higher before closing marginally lower for the second day, albeit the local bourse is still holding firm on the fresh new 11.5-year highs we hit on Tuesday. From the outset we had negative leads as Wall Street closed in the red with US equites closing lower for the second day.
Only a handful of sectors on the ASX saw selling with the Tech sector losing 3 per cent, the Consumer Discretionary shedding 2.5 and Energy falling closely behind, all holding us back.
It comes as Afterpay Touch Group (ASX:APT) parried back from recent gains on AML fear selling, while Harvey Norman (ASX:HVN) shares fell sharply, losing about 4 weeks of gains.
At the closing bell the S&P/ASX 200 index closed 1 point lower to finish at 6,542.
Dow futures are suggesting a fall of 33 points.
S&P 500 futures are eyeing a dip of 4 points.
The Nasdaq futures are eyeing a fall of 15 points.
And the ASX200 futures are eyeing a 4-point fall.
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).
Wesfarmers (ASX:WES) advised Target's total sales in the second half fell by 3.6 per cent while comparable sales slipped 2.3 per cent. Meantime, after several years of strong volume growth Kmart's trading remained in line with the first half, rising by 1.8 per cent, with comparable sales increasing by 0.2 per cent over the 22 weeks from January to May 2019. It comes just a day after the conglomerate announced a deal to snap up Australian online retailer, Catch Group Holdings for $230 million cash. Catch is the operator of Catch of the Day online site and app, which allows users to pay for the latest goods deals using Zip (ASX:Z1P) and Afterpay (ASX:APT). Global heavyweight Citi says Catch will provide a much-needed boost to Kmart and Target’s e-commence capability and is a synergy for both chains. However, it maintained its sell rating in WES with a 12-month price target of $29.00. Shares in Wesfarmers (ASX:WES) closed 5.2 per cent lower at $36.28.
Afterpay (ASX:APT) shares fell 12 per cent, it 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 limit per transaction.
Australian property development company, Stockland (ASX:SGP) is expecting its distribution growth rate to hit 4 per cent (at, 27.6 cents) and that’s at the bottom end of target payout ratio for FY19.
Investment management company, Challenger (ASX:CGF) shares fell 9 per cent 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.
Best and worst performers of the day
The best performing sector was Health Care, adding 1.7 per cent while the worst performing sector was Information Technology, shedding 3 per cent.
The best performing stock in the S&P/ASX 200 was Bingo Industries (ASX:BIN), rising 5.1 per cent to close at $2.07. Shares in Coca-Cola Amatil (ASX:CCL) and Charter Hall Long WALE REIT (ASX:CLW) followed higher.
The worst performing stock in the S&P/ASX 200 was Afterpay Touch Group (ASX:APT), dropping 12.1 per cent to close at $22.55. Shares in Challenger (ASX:CGF) and Harvey Norman Holdings (ASX:HVN) followed lower.
Mixed: Japan’s Nikkei has lost 0.5 per cent, Hong Kong’s Hang Seng has lost 0.8 per cent and the Shanghai Composite has gained 0.1 per cent.
Commodities and the dollar
Gold is trading at US$1,337 an ounce.
Iron ore price is trading flat at US$106.60.
Iron ore futures are pointing to a fall of 0.5 per cent.
Light crude is US$2.09 down at US$51.66 a barrel.
One Australian dollar is buying 69.12 US cents.