Another grinding start to ASX trading today after a tough night on Friday offshore, especially in US markets.
While Eurozone shares rose 0.4%, Wall Street tanked after an initial gain on the November jobs data and the US S&P 500 fell 2.3% as fears about China-US trade and growth returned.
A scratchy deal by OPEC, Russia and other producers to cut their daily output by 1.2 million barrels left markets unconvinced and early solid gains for oil faded.
Reflecting all of that – especially the US sell-off, the ASX 200 futures fell 30 points or 0.5% pointing to a weak start to trade for the Australian share market today.
The expected negative start should account for the 14.3 points, or 0.3% rise in the ASX 200 last week (to end Friday at 5681.5) while most other global markets fell.
That was probably a bit of give back as the Australian market dipped the week before while other global markets rose.
Given the unconvincing deal to cap global oil production for six months from January 1, it will pay to watch the local oil and gas sector for a reaction today.
The sector enjoyed a relatively solid week last week in anticipation of an oil deal on Thursday night, but when that was delayed, there was a small sell-off on Friday.
For example, while Woodside Petroleum shares were down just 0.1% last week, the 1.6% slide on Friday converted a small gain into that loss. Santos shares lost half a percent on Friday but still gained 1.6% for the week, while Beach shares were steady on Friday and up nearly 3.3% last week.
Shares on Qantas sold off by more than 4% last week in expectation of a price settling production cap (which will mean higher fuel costs). Watch the shares today for a guide if investors think the losses were taken before the news last week and that the cap won’t be bad news for the airline’s costs.
The big shock on Friday was the hammering of IOOF shares after APRA warned of legal action against five senior executives and moves to toughen its controls over the company’s superannuation business.
The shares lost 35% to end at $4.60 after the regulator accused the executives including CEO Chris Kelaher and chair George Venardos of not acting in the best interests of superannuation members.
Major investors at the weekend criticised the board and management with several calling for a meeting of shareholders to revamp the company.
IOOF was the second company last week to be battered by the fallout from the Hayne royal commission. Earlier in the week Freedom insurance Group warned of more losses and up to $4 million in remediation costs, and admitted to doubts the company was a solvent concern.
Directors said it was solvent (it has already lost two CEOs and several other senior executives). Freedom shares ended at 2.6 cents on Friday, down 10% on the day and 58% for the week.
Among the big financials, ANZ shares were hit by the IOOF news from APRA, falling 4% over the week. But the shares rose 1.6% on Friday after the bank raised doubts the $975 million sale bank’s OnePath wealth business to IOOF may now not go ahead.
Shares in AMP took another hit on Friday, losing 4.1% on the day and 3.3% for the week as investors wondered if it would be next to face action from APRA (or ASIC, the corporate regulator).
Commonwealth Bank shares ended off 1.2% for the week, Westpac shares dipped 0.9% (its annual meeting is this Wednesday where it will face shareholder criticisms), while NAB shares dropped 2.6%.
GrainCorp shares rose 25.5% over the week after the oddly structured and indefinite $3.3 billion from a company called Long Term Asset Partners.
Metcash shares ended down nearly 12% after a weak interim profit and outlook. Coles shares dipped to an all-time low of $11.26 before rebounding to end the week up 7.6% and outperforming larger rival Woolworths which rose 1%.
Retail sales figures on Thursday for October were OK, but not brilliant after the September quarter national accounts revealed a weakening in consumer spending.
Defensive stocks were again attractive last week with Transurban rising 4.1% over the week, Scentre Group securities adding 6.7%, Goodman Group up nearly 7% to $10.96, and Stockland adding 5.5%.
Lynas shares ended a rough week uncertain and down 20% after the Malaysian Government ended a review of the company’s rare earths processing business in the country with the strong threat to force it to remove hundreds of thousands of tonnes of waste material at a cost of $60 million or more.
Adelaide and Brighton shares fell more than 9% on Friday after the company revealed its 2018 net profit would fall short of previous forecasts and possibly the 2017 result.
Among the miners, BHP rose 1.6% but Rio Tinto shares were off 1.3%.
