Tech leads ASX tumble, Travel stocks lift: Aus shares close 1.2% lower

Market Reports

by Lauren Evans

The Australian sharemarket had a rough session today ahead of the interest rate outcome tomorrow from the Reserve Bank of Australia.

A looming federal election this month weighs on the central bankers tomorrow after the nation's inflation climbed 5.1 per cent annually in March from 3.5 per cent the month prior.

Meanwhile, a weak lead from Wall Street sent Aussie shares to tumble. At the closing bell, the S&P/ASX 200 was 1.2 per cent or 88 points lower at 7347.

Tech led broad-based tumble

Information tech shares led the decline by 4 per cent, followed by property, down 3.7 per cent, then communication services, down 2.2 per cent. On the lighter side, industrials fell 0.3 per cent and utilities fell 0.4 per cent.

The worst performer was Imugene (ASX:IMU), down 13.6 per cent to $0.19 after the highly anticipated supply agreement between Imugene and pharmaceutical US giant Merck & Co unveiled in March was terminated.

Other big decliners included ProMedicus (ASX:PME), down 8 per cent to $43.70, and tech giants like WiseTech (ASX:WTC) down by 7.4 per cent to $41.97 and Xero (ASX:XRO) down by 6.3 per cent to $90.29.

Across the banks, Macquarie (ASX:MQG) weighed the most, down 2 per cent to $202.80, while Westpac (ASX:WBC) finished flat at $23.89 and ANZ (ASX:) closed flat at $27.32.

However, there was some green amid the fall, with PointsBet (ASX:PBH) up by 5.7 per cent to $3.17 and Qantas (ASX:QAN) up by 3 per cent to $5.77.

On another note, it was a big day for travel stocks.

Regional Express (ASX:REX) and American player Delta Air have connected at the tip to leverage each other’s networks. The move is set to see the small airline player rival the flying kangaroo, Qantas (ASX:QAN). The partnership with Delta will give strong branding power to Rex’s new strategy with Qantas. Shares in Qantas (ASX:QAN) closed 3 per cent higher at $5.77, while shares in Regional Express (ASX:REX) closed 1.6 per cent higher at $1.25.

Rio ahead, energy lifts, gold under pressure

On the iron ore front, Rio Tinto (ASX:RIO) rose 0.7 per cent to $113.59, while BHP (ASX:BHP) finished flat at $47.98 and Fortescue Metals (ASX:FMG) closed flat at $21.65.

Beach Energy (ASX:BPT) led energy stocks higher, up 1.2 per cent to $1.65, with Woodside Petroleum (ASX:WPL) up by 0.1 per cent to $31.19 and Santos (ASX:STO) up by 0.1 per cent to $8.01.

Gold stocks weighed, led by Evolution Mining (ASX:EVN) down by 2.2 per cent to $3.96. Northern Star (ASX:NST) fell 2.1 per cent to $9.61 and Newcrest Mining (ASX:NCM) closed 0.9 per cent lower at $26.64.
 
Local economic news

The residential property markets of Australia’s two largest cities have hit their first quarter of negative territory since the extended lockdowns of 2020. Sydney and Melbourne’s market slowdown has seen CoreLogic’s national Home Value Index continue to lose steam through April. Housing values are still rising at the national level, however the 0.6 per cent monthly rate of growth is the lowest reading since October 2020.

Sydney housing values recorded the third consecutive month-on-month decline, down 0.2 per cent, while Melbourne values were flat. Technically values are down over three of the past five months in Melbourne. Hobart also recorded a negative monthly change (-0.3 per cent), the city’s first monthly fall in 22 months.

The Australian Industry Group performance of manufacturing index increased to 58.5 in April of 2022 from 55.7 in the previous month, the highest since July 2021. "New orders increased further in April and, with many businesses feeling capacity constraints and difficulties in securing inputs and staff, the pressures on filling orders are set to continue in coming months," Ai Group chief executive Innes Willox said.

ANZ job advertisements fell by 0.5 per cent in April.

Melbourne Institute Inflation gauge fell by 0.1 per cent in April but was still up 3.4 per cent on a year ago.

Here are the top headlines for today

Qantas (ASX:QAN) said it's seeing a sustained recovery in travel demand as Australia transitions to living with Covid-19. It said revenue growth during the third quarter has led to a rapid reduction in net debt of $1 billion to $4.5 billion by the end of April, below pre-Covid levels. This compares to a peak of more than $6.4 billion at the height of border closures. However, the company still expects to post a full year EBIT loss for FY22, that includes the worst of the Delta and Omicron impacts as well as one-off restart costs. Shares closed 3 per cent higher at $5.77

Helloworld Travel (ASX:HLO) also said its post-Covid recovery continues as borders reopen and confidence returns as travellers book with longer lead times and a higher average spend. Its revenue during the March quarter rose by 52 per cent, while its EBITDA loss of $1.9 million improved by 53 per cent compared with the prior year period despite a $4.8 million reduction in government wage subsidies. Shares closed 2.6 per cent higher at $2.73.

Regional Express (ASX:REX) and Delta Air Lines are set to provide interline ticketing and baggage services to each other, starting in the third quarter of 2022, after Rex Airlines signed a letter of intent with Delta. It said Rex’s passengers will be able to connect seamlessly on Delta’s daily flight between Sydney and Los Angeles, a frequency which will increase to 10 flights a week beginning in December. Shares closed 1.6 per cent higher at $1.25.

AGL Energy (ASX:AGL) downgraded its earnings guidance for the 2022 financial year following a review of the anticipated financial impact of the generator fault at the Loy Yang Power Station in Victoria, which is expected to cost around $73 million pre-tax. It expects underlying EBITDA to be between $1.23 to $1.3 billion, down from the previous guidance range of between $1.27 billion and $1.4 billion. It also expects underlying profit after tax to be between $220 and $270 million, down from the previous guidance range of between $260 million to $340 million. Shares closed 0.2 per cent lower at $8.66.

Ahead of its March half year results release later this week, National Australia Bank (ASX:NAB) has entered into an enforceable undertaking with the financial intelligence agency AUSTRAC after an investigation confirmed flaws in the bank’s compliance with money laundering laws. Shares closed 1.1 per cent lower at $32.27.

Telstra (ASX:TLS) appointed Michael Ackland as its new chief financial officer and group executive of strategy & finance, starting from September 1. Michael is currently group executive for consumer & small business, and will take over from Vicki Brady when she starts in her new role as chief executive officer. The search to fill Michael's current role has commenced. Shares closed 1.2 per cent lower at $3.99.

Centuria Office REIT (ASX:COF) reinforced its FY22 funds from operations guidance of 18.3 cents per unit, and its distribution guidance of $16.6 cents per share, representing a distribution yield of 7.5 per cent based on the current trading price. It said its portfolio occupancy has increased to 94.1 per cent, comprising modern office buildings leased on strong tenant covenants. Shares closed 1.4 per cent higher at $2.23.

Liontown Resources (ASX:LTR) completed negotiations with LG Energy Solutions, and executed its first offtake agreement for the supply of spodumene concentrate from its Kathleen Valley lithium Project in WA. The agreement with South Korean-based LG is consistent with its announcement in January, which includes the supply of up to 150,000 dry metric tonnes per annum of spodumene concentrate expected to commence in 2024. Shares closed 2.1 per cent lower at $1.44.

Crown Resorts (ASX:CWN) said it held discussions with the Victorian government to clarify aspects of its proposal to increase the tax rate for electronic gaming machines at Crown’s Melbourne operation. Crown estimated that if the proposed arrangements were in place during FY19, prior to Covid-19, the impact on earnings would have been about $35 to $40 million while the actual impact on future earnings will depend on various matters including the revenue generated at Crown Melbourne. Shares closed 0.4 per cent lower at $12.85.

Core Lithium (ASX:CXO) executed a crushing services contract with CSI Mining Services for the Finniss Lithium Project near Darwin, Northern Territory. The crusher civil works are nearing completion with CSI expected to start mobilising to the project during June this year. Shares closed 5.6 per cent lower at $1.32.

Two changes to Aussie Broadband’s (ASX:ABB) outlook was enough to send the share price tumbling X in their third quarter, financial year 2022 update. Firstly, the updated full-year EBITDA guidance was cut from $27 million to $30 million to $27 million to $28 million from their second quarter results, and secondly, their total active broadband connections guidance was trimmed from 580,000 to 590,000, to 580,000 to 585,000. Shares closed 27.2 per cent lower at $4.05.

Best and worst performers

All sectors closed in the red. The sector with the fewest losses was industrials, down 0.3 per cent. The worst-performing sector was information technology, down 3.9 per cent.

The best-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH), closing 5.7 per cent higher at $3.17. It was followd by shares in Qantas Airways (ASX:QAN) and Chalice Mining (ASX:CHN).

The worst-performing stock in the S&P/ASX 200 was Imugene (ASX:IMU), closing 13.64 per cent lower at $0.19. It was followed by shares in Pro Medicus (ASX:PME) and City Chic Collective (ASX:CCX).

Futures

The Dow Jones futures are pointing to a rise of 110.00 points.
The S&P 500 futures are pointing to a rise of 20.00 points.
The Nasdaq futures are pointing to a rise of 85.75 points.
The SPI futures are pointing to a fall of 91 points when the market next opens.

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