ASX closes flat as banks, energy stocks weigh
Luke Housego

The Australian sharemarket closed flat on Tuesday and energy companies underperformed following the federal government’s announcement it would back gas pipeline construction and a new gas-fired power station.

The S&P/ASX 200 Index dipped 4.7 points, or 0.1 per cent, to close at 5894.8 following a positive lead for Wall Street.

Overnight the US market was helped by an announcement from pharmaceuticals giant Pfizer that it intends to expand the phase three clinical trials for its vaccine with the hope of deployment by year’s end.

That helped lift the S&P 50 by 1.3 per cent, while gains in the technology sector pushed the Nasdaq Composite 1.9 per cent higher.

The vaccine developments helped the real estate sector etch the best sector performance in local trade with Scentre Group shares jumping 5.2 per cent to $2.21 and Vicinity Centres added 1.9 per cent to close at $1.38.

Meantime, the Reserve Bank of Australia’s monetary policy meeting two weeks ago showed the central bank’s board would “consider how further monetary measures could support the recovery”.

UBS in turn lifted its expectations of further government bond buying from the RBA.

“We previously noted the RBA’s dovish shift suggests they’re closer to ‘proper QE’ as the next option, with [about a] 50 per cent chance over coming months. However, the minutes were marginally less dovish,” UBS economist George Tharenou said.

While the language suggested the RBA was prepared to take further policy action in support of its agenda, the statement built on a negative revision in its assessment of the economic outlook after Victoria’s containment measures.

Further confirmation of the economic rebound in China offered investors some positive news. After the world’s No. 2 economy reported key activity data ANZ lifted its forecast for China’s 2020 annual GDP growth to 2.1 per cent from 1.8 per cent.

Australia’s iron ore exporters, though, ended the session mixed, with Fortescue Metals Group sliding 0.1 per cent to $17.70 while BHP added 0.7 per cent to close at $37.49. Rio Tinto shares shed 1.5 per cent to close at $102.13.

Shares among energy producers and major industrial energy consumers softened following the gas sector policy announcement by Prime Minister Scott Morrison’s government.

Santos shares closed 2.9 per cent lower at $5.09, shares in Origin Energy fell 1.9 per cent to $4.62, while shares in commercial energy consumer Incitec Pivot slid 0.9 per cent lower to $2.12.

The session saw the buy now pay later providers help lift the ASX All Technology Index 0.7 per cent higher.

Such stocks got a boost from an Australian Competition Tribunal decision that fould found FlexiGroup’s instalment payment offering had not caused consumer harm in a case that considered how the financial service had been used to fund residential solar system purchases.

The decision helped market heavyweight Afterpay to rise 3.4 per cent to $74.61, and Openpay Group to jump 8.7 per cent to $3.01.

FlexiGroup shares closed lower, however, easing 0.5 per cent to finish the day’s trading at $1.09,

Uniti Group shares surged 16.4 per cent to $1.42 after it raised its offer for broadband infrastructure developer and owner OptiComm to match a rival bid from First State Super. and increased its shareholding in the target company to 19.5 per cent.

OptiComm shares rose on the news, climbing 5.5 per cent to $6, leaving the stock 15¢ above the $5.85 on offer under the competing bids.

Qantas said it was considering moving its headquarters as part of a review of lease and property costs. Qantas identified the Western Sydney Airport, 50 kilometres west of the CBD and scheduled to open international operations in 2026, as a potential future base. The flag carrier’s shares closed in line with its previous close at $3.94.

Perenti closed 5.5 per cent higher at $1.26 after telling investors its mining services brand, Barminco, had secured a contract extension with MMG at Dugal River mine in North Queensland.

And after Macquarie Group shares lost 4.7 per cent on Monday after its profit guidance update, JPMorgan reaffirmed its “overweight” rating on the investment bank. Macquarie Group shares closed 1.3 per cent lower, however, sliding to $118.69.

The major lenders also dragged on the market after the big four banks closed between 1.4 per cent and 1.9 per cent lower.

In litigation funding, Omni Bridgeway said it had been granted a financial services licence by the corporate regulator. The AFSL was a requirement announced in May for class action financiers. The company’s shares rose 1.3 per cent higher to close at $3.91.

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