The Australian sharemarket extended its slide for a second day as investors digested a busy day of company updates, but National Australia Bank set a positive tone for bank reporting season.
At close of trade the S&P/ASX 200 Index closed 1.2 per cent lower at 5295.5, falling below the 5300 mark for the first time in five weeks. The slide took losses over the past two sessions to 2.7 per cent, wiping more than $40 billion off the benchmark index's value. The All Ordinaries also closed 1.2 per cent lower on Thursday, at 5378.4.
In a busy day of annual general meetings, shareholders of JB Hi-Fi, Tatts Group, Blackmores, Ardent Leisure, Challenger, Steadfast, Tassal, APA and Whitehaven Coal came toe to toe with company boards.
Among the updates, Blackmores shares briefly tumbled below the $100 mark, falling more than 50 per cent since the start of the year, but clawing back to close 1.3 per cent higher after the vitamin maker flagged a poor start to the financial year, with September quarter net profit diving 46.6 per cent to $12 million.
Karen Jorritsma, Citi director in equity sales said the selling on the Index, which accelerated into the afternoon, was part of a broader trend emerging in a sell-off of momentum stocks, or those trading at high price-to-earnings ratios.
"I think it's around valuations, two weeks ago [high PE stocks] were looking pretty toppy," she said. "A couple of downgrades have reminded people that things are expensive and not invincible."
Wesfarmers shares extended their Wednesday losses, falling 2.7 per cent a day after the company said first-quarter sales growth at Coles had slowed worse than expected, leading to the stock's biggest fall since the global financial crisis.
National Australia Bank's $6.48 billion profit, which exceeded analyst expectations, cheered investors who sent the stock up as high as 1.5 per cent before closing 0.5 per cent higher. The positivity failed to spill into the other banks, which all closed lower, with Commonwealth Bank the biggest drag on the Index, down 1.6 per cent.
Resources stocks also weighed, with the materials sector down 2.1 per cent, dragged by BHP Billiton and South32, losing 1.4 per cent and 8.1 per cent respectively, and gold mining names littered the worst performing list.
There were some bright spots, with Challenger announcing at its AGM it had entered annuity deals with AMP and Mitsui Sumitomo Primary Life Insurance to diversify is product range while reaffirming its Life segment's 2017 cash earnings operating earnings guidance range of $620 million to $640 million. It sparked a rally in its shares but lost some steam by end of trade, closing 4.3 per cent higher.
Market movers
NAB profits
National Australia Bank kicked off bank reporting season, announcing at $6.48 billion full year profit while keeping its dividend steady at 99¢ a share. The profit beat consensus expectations of $6.4 billion, and Watermark Funds Management analyst Omkar Joshi said the better-than-expected results were from lower bad debts and expenses which benefited from charges booked in previous periods. NAB shares closed 0.5 per cent higher at $27.59.
House prices
The property market in Melbourne and Sydney remains hot, hitting new record highs according to Domain Group data. The median house price for Sydney is now $1.068 million after jumping 2.7 per cent in the September quarter, while in Melbourne a leap of 3.1 per cent in three months pushed to median price to $773,669. In Darwin and Perth prices however remain on the slide. The Reserve Bank of Australia has noted property prices remain elevated and investors will await comments from its policy decision next week.
Terms of Trade
Exports rose 3.5 per cent in the September quarter, while imports fell 1 per cent, down four straight quarters. The data from the Australian Bureau of Statistics pushed Australia's terms of trade up 4.5 per cent for the quarter, CommSec economists estimated, the biggest jump since 2011. Commonwealth Bank analysts lifted its year end target for the Australian dollar from US73¢ to US77¢ on the improved terms of trade. The dollar meanwhile retreated from its push as high as US77.09¢ following Wednesday's CPI data, buying US76.32¢ in late trade.
Ardent Leisure
Theme park operator Ardent Leisure was the day's best performing stock, regaining some off the steep losses that were triggered by the accident at its Dreamworld property that claimed the lives of four people. While chief executive Deborah Thomas said the incident would have "a significant impact" on earnings in its theme parks for the rest of the year at the company's annual general meeting in Sydney, she also told shareholders that no further guidance would be given at this stage. Its shares closed 7.5 per cent higher at $2.15.
Stock Watch: APN News&Media
Shares in APN News & Media plunged 11.6 per cent to $2.76 on Thursday after the company returned to trade following a capital raise. It had earlier fallen as much as 20 per cent.
The stock returned from a trading halt following an institutional placement to fund the $268.4 million acquisition of the 50 per cent stake in outdoor advertising company Adshel that it didn't already own and Conversant Media for $11.6 million as it pushes harder into advertising following the spin off of its New Zealand business.
The five for 13 institutional offer came at a 27.5 per cent discount to the company's $3.38 a share closing price prior to the announcement at $2.45 a share. UBS analysts maintained their "neutral" rating on the stock but lowered their price target from $3.50 to $3 due to the dilutive effect from the capital raising.
