Afterpay votes in favour of Square, Covid cases jump: ASX ends flat

Market Reports

by Lauren Evans

The Australian sharemarket lifted in the afternoon session but remained under pressure as Mesoblast (ASX:MSB), Woolworths (ASX:WOW) and Afterpay (ASX:APT) weighed on the market. Amid a surge in Covid-19 cases, the S&P/ASX 200 closed flat or 1 points lower at 7,378.

Across the sectors, 4 out of 11 closed in the red. Consumer staples were the biggest drag, down almost 4 per cent, followed by consumer discretionary, down 1.3 per cent, and energy, down 0.8 per cent. On the other hand, real estate investment trusts were the best performer, up 1.2 per cent, followed by materials, up 0.7 per cent. 

Supermarket giant Woolworths (ASX:WOW) closed 7.3 per cent lower, after a disappointing trading update that revealed Covid costs weighing heavily on earnings during the first half of FY22. Meanwhile, Coles (ASX:COL) closed 2.7 per cent lower and Wesfarmers (ASX:WES) closed 2.3 per cent lower. 

Buy now, pay later provider Afterpay (ASX:APT) closed 4.1 per cent lower, while its shareholders voted in favour of the Square takeover. Medicine developer Mesoblast (ASX:MSB) tumbled 17.1 per cent after Novartis chose to terminate its agreement. 

Energy stocks fell, with Whitehaven Coal (ASX:WHC) down 4.1 per cent and Ampol (ASX:ALD) down 2 per cent. Travel stocks were also lower amid a rise in Covid-19 cases in NSW. Flight Centre (ASX:FLT) was down 2.1 per cent and Corporate Travel Management (ASX:CTD) was down 2.7 per cent.

On a positive note, iron ore giants lifted as Fortescue Metals (ASX:FMG) rose 1.35 per cent. Charter Hall (ASX:CHC) climbed 5 per cent higher and medical device company PolyNovo (ASX:PNV) closed 15.4 per cent higher after reporting on its US sales in the second quarter. 

In headlines, aerial imagery company Nearmap (ASX:NEA) closed 4.8 per cent higher after revealing strong growth in its North American annual contract value portfolio. Growthpoint Properties (ASX:GOZ) closed 1.9 per cent higher after upgrading its FY22 guidance.

Local economic news

ANZ and Roy Morgan released their weekly consumer report. Pent-up demand for shopping is set to continue in the post-Christmas sales, with $21 billion to be spent in stores and online across the country – an increase of 2.1 per cent on the previous year and up 12.6 per cent on pre-pandemic levels in 2019.

The Australian Retailers Association (ARA) has today released the forecasts in conjunction with Roy Morgan, which show a bumper trading period from Boxing Day through to mid-January. Australians are expected enjoy their freedoms over the festive period, spending $2.9 billion in hospitality – up 10.7 per cent on the previous year.

There is strong sales growth forecast for Victoria, up 6.6 per cent on the previous year, while clothing, footwear and accessories continue to bounce back strongly across the country, up 6.9 per cent.

NAB released its November business survey. Business conditions edged higher in November as the post-lockdown rebound impact waned.

Conditions rose 2 points to plus 12 index points in November, remaining above the long-run average after rebounding in the prior month. The improvement in conditions was driven by employment, which rose 5 points to plus 11 index points. Trading conditions (up 1 point) and profitability (unchanged) were largely steady.

The result was driven by a rise in the employment index as businesses re-hired staff alongside the recovery in activity, including in manufacturing and retail. However, conditions in the recreation & personal services industry – the sector most affected by lockdown. While the easing in restrictions has come in NSW and Vic, the largest gains in conditions were actually in Qld and SA.

NSW recorded a jump in daily Covid-19 cases, up 804 from the 536 reported yesterday. There were just 179 cases two weeks ago.

Company news

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Woolworths (ASX:WOW) reported on its first half of FY22, saying Australian Food earnings are expected to be weaker than a year ago with Covid-19 costs still weighing.

For the first time ever, Nearmap (ASX:NEA) expects the annualised contract value (ACV) of its North American portfolio to surpass the ACV of its Australia and New Zealand portfolio by the end of the month.

Growthpoint Properties (ASX:GOZ) have upgraded their FY22 guidance following an active business period.

Woodside Petroleum (ASX:WPL) has appointed Graham Tiver from BHP as chief financial officer and executive vice president following the resignation of CFO Sherry Duhe last month. 

Pharmaceutical company Novartis has terminated the agreement with medicine developer Mesoblast (ASX:MSB) prior to closing.

Polynovo (ASX:PNV) reported on its US sales having more than doubled in the second quarter of FY22 compared with a year prior.

Futures

The Dow Jones futures are pointing to a rise of 36 points.
The S&P 500 futures are pointing to a rise of 7 points.
The Nasdaq futures are pointing to a rise of 20 points.
The SPI futures are pointing to a rise of 5 points when the market next opens.

Best and worst performers

The best-performing sector was Real Estate Investment Trusts, up 1.2 per cent. The worst-performing sector was Consumer Staples, down almost 4 per cent.

The best-performing stock in the S&P/ASX 200 was PolyNovo (ASX:PNV), closing 15.4 per cent higher at $1.57. It was followed by shares in Blackmores (ASX:BKL) and Charter Hall Group (ASX:CHC).

The worst-performing stock in the S&P/ASX 200 was Mesoblast (ASX:MSB), closing 17.4 per cent lower at $1.41. It was followed by shares in Woolworths Group (ASX:WOW) and Whitehaven Coal (ASX:WHC).

Asian markets

Japan's Nikkei has lost 0.8 per cent.
Hong Kong's Hang Seng has lost 1.2 per cent.
China's Shanghai Composite has lost 0.4 per cent.

Commodities and the dollar

Gold is trading at US$1786.99 an ounce.
Iron ore is 7.4 per cent higher at US$110.20 a ton.
Iron ore futures are pointing to a rise of 0.3 per cent.
Light crude is trading $0.41 lower at US$70.65 a barrel.
One Australian dollar is buying 71.04 US cents.

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