A2 Milk jumps 8%, Banks drag: ASX edges 0.1% higher at noon

The Australian sharemarket got off to another slow start this morning before edging slightly higher around lunchtime. At noon, the S&P/ASX 200 is 0.1 per cent or 6.9 points higher at 7287.6. The SPI futures are pointing to a rise of 12 points.

All sectors are in the black except financials, down 0.5 per cent and health care, down 0.2 per cent. Technology is up 1.4 per cent as the best performer. Real estate is next, up 1 per cent, then consumer discretionary, up 0.8 per cent. 

The best-performing stock is the A2 Milk Company (ASX:A2M), trading 8.1 per cent higher. The worst-performing stock is Bank of Queensland (ASX:BOQ), trading 3.9 per cent lower, following its FY21 results released this morning. 

Tech stocks have rebounded from losses, led by Afterpay (ASX:APT), up 2.5 per cent and Xero (ASX:XRO), up 2 per cent. Energy stocks are helping the ASX lift, with Woodside Petroleum (ASX:WPL) up 1 per cent and Worley (ASX:WOR) up 1.6 per cent. Pumping manufacturing company GUD (ASX:GUD) is up 6.8 per cent and Star Entertainment (ASX:SGR) is up 5.8 per cent. 

Heavyweight miners are falling with Rio Tinto (ASX:RIO and Fortescue (ASX:FMG) both down 1.2 per cent, as iron ore prices trade lower. Major banks are declining, led by Westpac (ASX:WBC), down 1 per cent. Asset management company Janus Henderson (ASX:JHG) is down 1.7 per cent.

In headlines, Transurban (ASX:TCL) is trading 0.8 per cent higher, despite a $371 million shortfall in its capital raising for WestConnex. 

Local economic news

The Australian Bureau of Statistics released their building activity report for the June quarter. The report provides estimates of value of building work and number of dwellings commenced, completed, under construction and in the pipeline.

Total dwelling unit commencements rose 23.2 per cent to 64,596 dwellings. New private sector house commencements rose 13.7 per cent to 40,820 dwellings. New private sector other residential commencements rose 47.5 per cent to 22,515 dwellings. The value of total building work done fell -0.2 per cent to $30.3 billion.

Westpac and Melbourne Institute released the consumer confidence for October, which decreased by 1.5 per cent to 104.6 in October from 106.2 in September.

There was clear majority of optimists nationally with little difference in the state readings: NSW (103.4), Victoria (105.4), Queensland (105.3) and Western Australia (105.4) all show similar majorities of optimists. The success and pace of vaccine-led re openings in NSW and Victoria in conjunction with the efforts of Queensland and Western Australia to lift vaccination rates while remaining Covid-free will likely determine the profile of national confidence over the next few months.

The ‘time to buy a major household item’ sub-index posted a modest 0.9 per cent gain but remains at a relatively subdued level of 109.9. The long run average is 126.6. Easing Covid restrictions may provide more support for buyer sentiment in NSW and Victoria in the months ahead.  Reopening expectations gave a big boost to confidence around jobs. Unemployment Expectations fell 11.1 per cent to a six-month low of 107.1. NSW recorded a particularly strong improvement, the state index dropping 16.4 per cent to 97.7, to a 16- year low.

After briefly recovering somewhat last month the ‘time to buy a dwelling’ index took another sharp hit in October. The index fell by 13.8 per cent to be down by 37 per cent from its peak in November last year. The fall is almost certainly due to the sharp deterioration in affordability over the last year, dwelling prices having surged 20 per cent nationally over that time.

Company news

Roads developer Transurban (ASX:TCL) has wrapped up their $4.23 billion raising launched in September after completing the retail component of their entitlement offer, which closed at a $371 million shortfall.

Health insurer nib (ASX:NHF) has announced a new distribution partnership with ING Bank Australia that will allow Australians to purchase ING health insurance underwritten by nib.

Best and worst performers

The best-performing sector is Information Technology, up 1.4 per cent. The worst-performing sector is Financials, down 0.5 per cent.

The best-performing stock in the S&P/ASX 200 is The A2 Milk Company (ASX:A2M), trading 8.1 per cent higher at $6.27. It is followed by shares in GUD Holdings (ASX:GUD) and The Star Ent Group (ASX:SGR).

The worst-performing stock in the S&P/ASX 200 is Bank of Queensland (ASX:BOQ), trading 3.9 per cent lower at $9.34. It is followed by shares in Janus Henderson Group (ASX:JHG) and AMP (ASX:AMP).

Commodities and the dollar

Gold is trading at US$1761.69 an ounce.
Iron ore is 4.5 per cent lower at US$129.00 a ton.
Iron ore futures are pointing to a fall of 0.6 per cent.
One Australian dollar is buying 73.40 US cents.