The Australian share market continued to drop at the open, extending this week’s losses. The ASX200 index tumbled 1.6 per cent following negative leads from international markets. Sonic Healthcare (ASX:SHL) is leading the gains along with the gold stocks, with investors buying up before the company goes ex-dividend in a few days times. Media companies Southern Cross and Ooh! are leading the losses.
The S&P/ASX 200 index is 101 points lower at 6,295. On the futures market the SPI is pointing to a 114 point fall.
Citi has rated Netwealth Group (ASX:NWL) as a Buy. In a general update on wealth platforms in Australia, Citi analysts make it clear they anticipate ongoing downward pressure for the sector. The broker says two factors dominate that view: shaky equity markets and further cash rate cuts from the RBA. The house view at Citi is that the RBA will cut again in April. Earnings estimates have been reduced by double digits. Also, the analysts point out risk still exists that ANZ Bank ((ANZ)) could potentially lower the rate offered to Netwealth and HUB24 as the Big Four banks look to offset the decline in deposit margins.
Citi analysts believe the sector will try to compensate as much as possible through stringent cost control. Buy rating remains in place, but the price target for Netwealth Group declines to $8.80 from $9.60. Shares in Netwealth Group (ASX:NWL) are trading 4.8 per cent lower at $6.73.
Local economic news
Australian retail turnover fell 0.3 per cent in January 2020 in figures released this morning by the ABS.
This follows a fall of 0.7 per cent in December 2019.
Director of Quarterly Economy Wide Surveys, Ben James, said bushfires in January negatively impacted a range of retail businesses across a variety of industries and retailers reported a range of impacts that reduced customer numbers, including interruptions to trading hours and tourism.
The trend estimate for Australian retail turnover rose 0.1 per cent in January 2020, following a 0.1 per cent rise in December 2019. Compared to January 2019, the trend estimate rose 2.3 per cent.
Online retail turnover contributed 6.3 per cent to total retail turnover in original terms in January 2020. In January 2019, online retail turnover contributed 5.6 per cent to total retail.
Marine propulsion and gyro stabilisation company, VEEM (ASX:VEE) has successfully constructed the world’s largest and most powerful known gyrostabilizer. The stabilising device is due for delivery to Europe’s second largest ship builder, Damen Shipyards which consists of 36 shipbuilding and repair yards, employing 12,000 people worldwide. At 20 metric tonnes, the VG1000 SD easily eclipses the second largest gyro product VEEM produces, the VG260, which is approximately one quarter of the size of the VG1000 SD. VEEM Managing Director Mark Miocevich said the VG1000 SD has a broad potential market, with the product best suited to vessels 60 metres to 90 metres in length, which encompasses luxury and superyachts, defence and civil vessels, and has further commercial applications including windfarm services, oilfield services, crew transfer and ferries. Shares in VEEM (ASX:VEE) are trading 5.3 per cent lower at 45 cents.
Best and worst performers
The best performing sector is Consumer Staples, adding 0.1 per cent, while the worst performing sector is Information Technology, shedding 2.8 per cent.
The best performing stock in the S&P/ASX 200 is Gold Road Resources (ASX:GOR), rising 5.5 per cent to $1.45, followed by shares in Sonic Healthcare (ASX:SHL) and Regis Resources (ASX:RRL).
The worst performing stock in the S&P/ASX 200 is Ooh! Media (ASX:OML), dropping 8.2 per cent to $2.47, followed by shares in Southern Cross Media (ASX:SXL) and Janus Henderson Group (ASX:JHG).
Commodities and the dollar
Gold is trading at US$1,672 an ounce.
Iron ore price rose 1.7 per cent to US$92.57.
Iron ore futures are pointing to a fall of 0.9 per cent.
One Australian dollar is buying 66.10 US cents.