Australian sharemarket weaker after oil prices tumble, China moves hurt Whitehaven

The Australian sharemarket sank into the red, weighed down by heavy falls in the resources sector as oil prices tumbled, while a local coal miner was hit hard by China moves.

The benchmark S&P/ASX200 index closed 0.25 per cent lower at 7430.4, while the All Ordinaries Index shed 0.24 per cent to 7739.7.

CommSec analyst Steven Daghlian said the local bourse had barely budged for five of the six previous trading days, lacking direction after 18 months of “crazy movements” and breaking news on the pandemic.

The energy sector responded to a 2.5 per cent tumble in the oil price overnight.

“The news there that received attention was Iran and the European Union agreeing to restart negotiations on (reviving) the 2015 nuclear accord,” Mr Daghlian said.

“The reason that could be important for energy and oil prices is that it could potentially lead to increased oil supply from Iran.”

Beach Energy fell 2.79 per cent to $1.39, Woodside gave up 2.47 per cent to $23.67, Santos slid 1.94 per cent to $7.09 and Oil Search declined 1.35 per cent to $4.39.

After reports China had been turning to Russia for thermal coal as it shunned Australia’s, Whitehaven Coal slumped 4.95 per cent to $2.69.

“Whitehaven rode global energy shortages up to a yearly high just weeks ago,” OMG chief executive Ivan Tchourilov said.

“Unwinding supply chains and stocktaking has taken the fire out of coal prices since, and tangible action from the Chinese government will put further downward pressure on prices.

“The Aussie government’s commitment to net zero emissions by 2050 coincides with next week’s UN climate conference and will do a lot to mould future coal demand expectations.

“However, if the past few weeks are anything to go by, coal will remain a necessity while the transition gets underway.”

Rio Tinto weakened 1.47 per cent to $92.76 and BHP backtracked 1.7 per cent to $37.02, but Fortescue inched two cents higher to $14.02 after releasing results showing record iron ore shipments for a first quarter, but its average revenue was only 73 per cent of the “benchmark” price.

Mr Tchourilov said poor performance among diversified financials also dragged the market lower.

Macquarie Group lost 0.74 per cent to $197.83, while IOOF Holdings sank 8.5 per cent to $4.20 after releasing its quarterly update showing net outflows for funds under management and under administration totalled $2.3bn.

ANZ reported a leap in full-year net profit, with chief executive Antonia Watson crediting record demand in the housing market, a stronger-than-expected economy and a significant reduction in provisions the bank put aside last year.

ANZ rose 0.74 per cent to $28.60, Commonwealth Bank improved 0.72 per cent to $106.86, National Australia Bank lifted 0.5 per cent to $29.45 and Westpac gained 1.08 per cent to $26.23.

“The big four banks are growing louder with calls of an early interest rate hike, with CBA calling it as early as November next year,” Mr Tchourilov said.

“The market will be keeping an eye on RBA announcements next Tuesday when the board meets for November.”

Bookmaker PointsBet Holdings took a beating after announcing its quarterly results, plummeting 18.28 per cent to $8.63.

“Overall, the quarterly wasn’t horrible – they’re posting growth across a number of key areas, though modest in some parts,” Mr Tchourilov said.

“PointsBet hasn’t been below $9 per share since July 2020 and while it’s not cash-positive yet, continued growth domestically and expansion internationally make it an enticing entry point.

“The red flags are coming from cash flow, which they’re continuing to leak.

“Given investor reactions today, PointsBet will need to start plugging holes if it wants curry favour for future capital raises.”

Coles Group reported a total headline sales growth of 1.5 per cent for the September quarter, or 12.2 per cent on a two year basis.

UBS said Coles’ supermarket and liquor sales growth were ahead of its forecasts.

Coles shares inched two cents higher to $17.36, while rival Woolworths dropped 1.02 per cent to $38.76.

JB Hi-Fi jumped 3.28 per cent to $48.43 despite providing a September quarter sales update showing it went backwards compared to the previous corresponding period.

“Markets are not really surprised by this too much because it’s being compared to last year: of course we had that huge unsustainable and unusual spike in sales and demand … technology and home appliances as people were spending longer at home,” Mr Daghlian said.

New chief executive Terry Smart told JB Hi-Fi’s annual general meeting the impact of Covid-19 restrictions and store closures had been significant, but the group was confident entering the all-important Christmas trading period.

Star Entertainment Group held its AGM, rejecting media reports suggesting it was no better than scandal-plagued rival Crown Resorts and rattling off a list of efforts to combat money laundering including rolling out facial recognition technology in Queensland.

The company dodged a “second strike” against its remuneration report after a massive protest vote last year and said there were “no updates” regarding its spurned takeover offer to Crown, which Star abandoned after “limited engagement”.

Star shares added 0.55 per cent to $3.65, while Crown gave up 1.85 per cent to $10.11.

The Aussie dollar was fetching 75.06 US cents, 54.60 British pence and 64.66 Euro cents in afternoon trade.