Iron ore holds back market recovery: Aus shares close 0.1% lower

Market Reports

by Lauren Evans

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The Aussie market was under pressure in the afternoon session as major miners weighed on the index. At the closing bell, the S&P/ASX 200 was 0.1 per cent or 8 points lower at 7,273.

Across the sectors, materials and financials were the main drags, closing 1.1 and 0.6 per cent lower, while all remaining sectors closed in the black. Real estate added the most points, up 1.6 per cent. Technology and consumer staples were next, both closing 0.7 per cent higher. 

The best-performing stock was the A2 Milk Company (ASX:A2M), closing 13.5 per cent higher. The worst-performing stock was Fortescue Metals (ASX:FMG), closing 5.3 per cent lower. 

Heavyweight miners were a major drag as iron ore futures pointed to a 4.5 per cent fall. Mineral Resources (ASX:MIN) closed 4.6 per cent lower, Fortescue (ASX:FMG) closed 5.3 per cent lower, Rio Tinto (ASX:RIO) closed 3 per cent lower, Champion Iron (ASX:CIA) closed 1.9 per cent lower and BHP (ASX:BHP) closed 1 per cent lower.  

Major banks weighed, except NAB (ASX:NAB) which closed 0.3 per cent higher, while Commonwealth (ASX:CBA) closed 1.5 per cent lower. Bank of Queensland (ASX:BOQ) extended its losses, closing 4.2 per cent lower, following strong FY21 results and uncertainty in its FY22 guidance. 

On a brighter note, tech stocks made a comeback today, with Afterpay (ASX:APT) closing 0.7 per cent higher and Xero (ASX:XRO) 1.6 per cent higher. Star Entertainment (ASX:SGR) also closed 6.5 per cent higher. In headlines today, PointsBet (ASX:PBH) closed 4.9 per cent higher following the partnership between PointsBet Canada and Curling Canada. Transurban (ASX:TCL) closed 0.8 per cent higher following a $371 million shortfall in its entitlement offer.

Local economic news

The Australian Bureau of Statistics released their building activity report for the June quarter. The report provides estimates of value of building work and number of dwellings commenced, completed, under construction and in the pipeline.

Total dwelling unit commencements rose 23.2 per cent to 64,596 dwellings. New private sector house commencements rose 13.7 per cent to 40,820 dwellings. New private sector other residential commencements rose 47.5 per cent to 22,515 dwellings. The value of total building work done fell -0.2 per cent to $30.3 billion.

Westpac and Melbourne Institute released the consumer confidence for October, which decreased by 1.5 per cent to 104.6 in October from 106.2 in September.

There was clear majority of optimists nationally with little difference in the state readings: NSW (103.4), Victoria (105.4), Queensland (105.3) and Western Australia (105.4) all show similar majorities of optimists. The success and pace of vaccine-led re openings in NSW and Victoria in conjunction with the efforts of Queensland and Western Australia to lift vaccination rates while remaining Covid-free will likely determine the profile of national confidence over the next few months.

The ‘time to buy a major household item’ sub-index posted a modest 0.9 per cent gain but remains at a relatively subdued level of 109.9. The long run average is 126.6. Easing Covid restrictions may provide more support for buyer sentiment in NSW and Victoria in the months ahead.

Reopening expectations gave a big boost to confidence around jobs. Unemployment Expectations fell 11.1 per cent to a six-month low of 107.1. NSW recorded a particularly strong improvement, the state index dropping 16.4 per cent to 97.7, to a 16- year low.

After briefly recovering somewhat last month the ‘time to buy a dwelling’ index took another sharp hit in October. The index fell by 13.8 per cent to be down by 37 per cent from its peak in November last year. The fall is almost certainly due to the sharp deterioration in affordability over the last year, dwelling prices having surged 20 per cent nationally over that time.

Company news

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Roads developer Transurban (ASX:TCL) has wrapped up their $4.23 billion raising launched in September after completing the retail component of their entitlement offer, which closed at a $371 million shortfall.

Health insurer nib (ASX:NHF) has announced a new distribution partnership with ING Bank Australia that will allow Australians to purchase ING health insurance underwritten by nib.

Bank of Queensland (ASX:BOQ) has reported solid cash earnings and an increase in its net interest margin for the year ending 31 Aug 2021, while expressing uncertainty for FY22.

PointsBet’s (ASX:PBH) subsidiary PointsBet Canada has enter into an agreement to become the official and exclusive sports betting partner of Curling Canada, a sport association.

Futures

The Dow Jones futures are pointing to a rise of 10 points.
The S&P 500 futures are pointing to a fall of 3 points.
The Nasdaq futures are pointing to a fall of 14 points.
The SPI futures are pointing to a fall of 2 points when the market next opens.

Best and worst performers

The best-performing sector was Real Estate Investment Trusts, up 1.6 per cent. The worst-performing sector was Materials, down 1.1 per cent.

The best-performing stock in the S&P/ASX 200 was The A2 Milk Company (ASX:A2M), closing 13.5 per cent higher at $6.58. It was followed by shares in GUD Holdings (ASX:GUD) and The Star Ent Group (ASX:SGR).

The worst-performing stock in the S&P/ASX 200 was Fortescue Metals Group (ASX:FMG), closing 5.3 per cent lower at $14.00. It was followed by shares in Mineral Resources (ASX:MIN) and Bank of Queensland (ASX:BOQ).

Asian markets

Japan's Nikkei has lost 0.3 per cent.
Hong Kong's Hang Seng is flat.
China's Shanghai Composite has lost 0.4 per cent.

Commodities and the dollar

Gold is trading at US$1761.38 an ounce.
Iron ore is 4.5 per cent lower at US$129.00 a ton.
Iron ore futures are pointing to a fall of 4.5 per cent.
Light crude is trading $0.13 lower at US$79.79 a barrel.
One Australian dollar is buying 73.41 US cents.

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