The Monday Report – 03 May 2021

Daily Market Reports | May 03 2021

By Greg Peel

End of Month I

It was the end of the month, and it was a Friday, and the ASX200 had posted a rally for the month so no great surprise in some profit-taking. The extent of loss on Friday was nevertheless exacerbated by a handful of weak quarterly updates from individual companies.

The index gained 3.5% over April, with all of that coming in the first two weeks. Friday’s close ensured that after a lot of ups and downs, the index did not ultimately move in the second two weeks.

The big loser on the day was Beach Energy ((BPT)), down -24.1% after the company’s quarterly update included a reserve downgrade. The energy sector fell -1.7% to be the worst performer.

General profit-taking was apparent in Technology (-1.4%), materials (-1.3%) and healthcare (-1.3%). In the latter case, ResMed’s ((RMD)) quarterly earnings result included a miss on revenues. It fell -4.2%.

ANZ Bank ((ANZ)) announced another -$817m in write-downs, worth -50 basis points of tier one capital, and fell -0.7%. Financials lost -0.7%.

All sectors closed in the red bar industrials (+0.2%) and utilities (+0.4%), suggesting a slight switch into defensives.

PointsBet Holdings (PBH)) topped the index on the day with a 7.4% gain on its quarterly update, showing a 236% increase in gambling turnover. It’s a beautiful world we live in.

Mesoblast ((MSB)) rose 6.8% on trial results for its covid respiratory distress drug.

But there was a lot more action outside the index.

Japara Healthcare ((JHC)) announced it had received a takeover offer and jumped 26.3%. Call recording and analysis company Dubber ((DUB)) rose 18.6% on its quarterly. BNPL player Sezzle ((SZL)) gained 8.5% after announcing it intends to list in the US. Electro-Optic Systems ((EOS)) fell -8.1% on its update.

In economic news, China’s manufacturing PMI fell to 51.1 in April from 51.9 in March, with supply bottlenecks and softer demand to blame. The services PMI fell to 54.9 from 56.3.

We now enter the infamous month of May. If Friday was mostly about profit-taking then we should see a rebound today, but Wall Street’s gone and done the same thing, so our futures were down -7 points on Saturday morning.

That is only -0.1% to the S&P500’s -0.7%.

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