Tech sector down over 6% on rate fears: Aus shares 2.2% lower at noon

Market Reports

by Katrina Bullock

The Australian share market opened lower following negative leads from Wall Street. It fell in early trade and is tracking 2.2 per cent lower at noon. All of the sectors have fallen this morning, with tech stocks haemorrhaging over 6 per cent. This comes on the back of another surge in the 10-year US Treasury bond yield overnight. Higher rates tend to hit the tech sector especially hard as the group relies heavily on low interest borrowing for expansion.

The S&P/ASX 200 index is 149 points down at 6,685. On the futures market the SPI is 160 points lower.

Local economic news

The Australian Bureau of Statistics published data on business conditions and sentiments for February. The survey data shows that 41 per cent of businesses were significantly impacted by Covid-19 restrictions in February, down from 53 per cent. 41 per cent of businesses said that their cash on hand may not cover more than three months of operations.

The Reserve Bank of Australia released private sector credit data for the month of January. Private sector credit rose 0.2 per cent month on month, falling short of the expected 0.4 per cent rise. It is up 1.7 per cent year on year.

Broker moves

UBS rates a2 Milk Company (ASX:A2M) as a buy, reducing its price target to $8.76. The 33 per cent fall in a2 Milk earnings for the first half was in line with the broker’s expectations. UBS commends the company’s decision to reopen the daigou channel. UBS expects a meaningful recovery in indirect infant formula sales in the next two years. Shares in a2 Milk Company (ASX:A2M) are trading 0.3 per cent lower at $8.73.

Company news

Lithium chemicals producer Orocobre (ASX:ORE) has suffered a net loss of US$29.1 million for the first half to 31 December 2020. This follows a loss of US$18.9 million in the previous corresponding period. The company remains hopeful that a rebound is just around the corner, as lithium market conditions continue to improve. Shares in Orocobre (ASX:ORE) are trading 5.3 per cent lower at $4.81.

Litigation funder Omni Bridgeway (ASX:OBL) suffered more losses than expected in the first half, forcing it to take its interim dividend off the table. The company attributes its $153.3 million loss during the half to a number of factors including foreign exchange adjustments, fewer US court case completions due to Covid-19 and $133 million worth of provisions related to several cases. Shares in Omni Bridgeway (ASX:OBL) are trading 0.8 per cent lower at $3.74.

COG Financial Services (ASX:COG) has published its financials for the half year to 31 December 2020. Underlying NPATA rose 140 per cent during the half to $10.1 million. Revenue rose 14 per cent to $128.4 million. EBITDA to shareholders jumped 72 per cent to $18.7 million. This company says this strong result was fuelled by much improved earnings margins, a successful acquisition strategy and a revamped lending unit. Shares in COG Financial Services (ASX:COG) are trading 1.04 per cent higher at $0.10.

Best and worst performers

The best-performing sector is Utilities, with the fewest losses, down 1.3 per cent, while the worst performing sector is Information Technology, shedding 6.1 per cent.

The best performing stock in the S&P/ASX 200 is AMP (ASX:AMP), rising 3.9 per cent to $1.45, followed by shares in Lynas Rare Earths (ASX:LYC) and Silver Lake Resources (ASX:SLR).

The worst performing stock in the S&P/ASX 200 is Orica (ASX:ORI),dropping 19.8 per cent to $12.31, followed by shares in Afterpay (ASX:APT) and Service Stream (ASX:SSM).

Commodities and the dollar

Iron ore price rose 0.9 per cent to US$174.24.
Iron ore futures are pointing to a fall of 0.8 per cent.
One Australian dollar is buying 78.49 US cents.

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