AGL Energy (ASX:AGL) sinks on $2.7 billion write down: Aus shares down 0.7% at noon

Market Reports

by Katrina Bullock

The Australian share market opened slightly lower and continued to sink in early trade after Australia’s trade surplus for December came in weaker than expected. All of the sectors are down except Communications which is only managing to hold gains by the narrowest of margins.

The S&P/ASX 200 index is 45 points or 0.7 per cent lower at 6,780. On the futures market the SPI pointing to a drop of just over 1 per cent.

Local economic news

The Australian Bureau of Statistics released international trade data for December. The market expected its 36th monthly trade surplus in a row and projected a surplus of around $9 billion. Today’s data fell short of the mark, with Australia’s trade surplus rising to $6.8 billion in December. This follows a surplus of $5 billion in November.

Broker moves

Credit Suisse rates Domain Holdings (ASX:DHG) as an outperform, with a price target of $5.10. Domain expects to see operating expenses drop 12 per cent for the first half year on year. The broker considers the short-term operating environment favourable as volumes continue to rise, and it believes Domain is leveraged to the Sydney market. Shares in Domain Holdings (ASX:DHG) are trading 1.5 per cent higher at $5.38 at noon.

Company news

AGL Energy (ASX:AGL) issued a $2.7 billion write down for the period ended 31 December 2020. The write down related to long-term wind offtake agreements it entered into between 2006 and 2012. Prices in the agreements are significantly higher than spot and forecast prices for electricity and renewable energy certificates today. AGL anticipates the charges will have an immaterial impact on underlying profit after tax in the financial year 2021. Their full 2021 financial year guidance range for underlying profit after tax is unchanged and remains in the vicinity of $500 to $580 million despite the downgrade. Shares in AGL Energy (ASX:AGL) are trading 5.9 per cent lower at $11.15 at noon.

Best and worst performers

The best-performing sector and the only one in the green is Communications, adding 0.1 per cent, while the worst performing sector is Utilities, shedding 2.6 per cent.

The best performing stock in the S&P/ASX 200 is Pro Medicus (ASX:PME), rising 3.4 per cent to $44.36, followed by shares in ARB Corporation (ASX:ARB) and Harvey Norman Holdings (ASX:HVN).

The worst performing stock in the S&P/ASX 200 is Origin Energy (ASX:ORG), dropping 7.5 per cent to $4.59 on the back of an earnings write down, followed by shares in AGL Energy (ASX:AGL) and NRW Holdings (ASX:NWH).

Commodities and the dollar

Gold is trading at US$1,833 an ounce.
The Iron ore price rose 1.9 per cent to US$152.65.
Iron ore futures are pointing to a rise of 1.1 per cent.
One Australian dollar is buying 76.33 US cents.


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