ASX drops as investors shift their selling

Big companies trading ex-dividend and a weak offshore lead dragged the Australian share market lower, while a fund manager saw risk in where the market may be headed.

The S&P/ASX200 benchmark index closed lower by 57.3 points, or 0.84 per cent, to 6760.7 on Thursday.

The All Ordinaries closed lower by 67.3 points, or 0.95 per cent, at 7000.6.

Most sectors were lower.

The health sector declined the most, by 3.54 per cent.

CSL traded ex-dividend and shares fell 4.18 per cent to $255.83.

The materials sector fared next weakest and dropped 2.61 per cent.

Mining giants BHP and Rio Tinto were also ex-dividend.

BHP dropped 3.09 per cent to $49.30 and Rio Tinto shed 6.23 per cent to $121.67.

The materials sector was also hampered by lower base metals prices.

Financials was the top sector, up 1.09 per cent.

Tribeca Investment Partners portfolio manager Jun Bei Liu examined the movements.

"It's a fascinating day in how weak the market is," she said.

She noted increased selling in some sectors in the past week in response to rising bond yields and higher long-term borrowing costs.

"We've seen an aggressive sell-off of the winners of the pandemic, tech companies and high-growth businesses, because of the sell-off in bonds," she said.

Yet bonds were continuing to sell despite the change in equity markets, Ms Liu noted.

"It poses a bit of risk as to whether that might dent investors confidence going forward," she said.

Earlier, US markets were lower as investors continued selling big technology companies and moved to sectors more likely to benefit from coronavirus vaccines and fiscal stimulus.

Australia posted the biggest monthly trade surplus in its history, $10.1 billion for January.

Economists had forecast a surplus of around $6 billion.

Exports jumped six per cent, while imports declined two per cent.

The ASX had short-lived improvement following the news.

The Aussie dollar, moments before the data, had traded at 77 US cents and later rose to 78 US cents.

On the ASX, Synlait Milk scrapped full-year earnings guidance due to significant uncertainty over customer demand.

Synlait had targeted full-year net profit to be 50 per cent of the previous full-year figure.

That aim could no longer be achieved, according to the company.

The pandemic has affected supply to China, and Synlait said shipping delays were expected to continue around the world.

Shares were down 9.75 per cent to $3.24.

Financial software provider Xero said it would buy human resources software provider Planday.

The purchase will cost 183.5 million pounds.

Xero said Planday was an open platform which would integrate with its own.

Shares were lower by 2.61 per cent to $115.90.

Insurer QBE has named the boss of UK insurer Beazley, Andrew Horton, as its next chief executive.

After the market closed on Wednesday, the insurer said Mr Horton would join after 13 years running the UK-listed insurer, which trades across most continents.

He receives up to $4 million in company shares for joining, and $500,000 in cash in February next year.

Mr Horton will be paid about $1.8 million per year.

Shares were higher by 2.8 per cent to $9.54.

In banking, ANZ was best of the big four and rose 3.01 per cent to $28.39.

On Friday, investors may expect US Federal Reserve Chairman Jerome Powell to set the trend for markets during a media appearance.

Many will be eager to see if he addresses the spike in bond yields and long-term borrowing costs.

The dollar was buying 78.02 US cents at 1724 AEDT, lower from 78.22 US cents at Wednesday's close.

ON THE ASX

* The S&P/ASX200 benchmark index closed lower by 57.3 points, or 0.84 per cent, to 6760.7 on Thursday.

* The All Ordinaries closed lower by 67.3 points, or 0.95 per cent, at 7000.6.

* At 1724 AEDT, the SPI200 futures index was higher by two points, or 0.03 per cent, at 6755 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 78.02 US cents, from 78.22 cents on Wednesday

* 83.56 Japanese yen, from 83.53 yen

* 64.70 Euro cents, from 64.69 cents

* 55.90 British pence, from 56.05 pence

* 107.43 NZ cents, from 107.32 cents.