ASX recovers losses despite Fortescue drop

·4-min read

Heavyweight miner Fortescue Metals crashed as shares traded ex-dividend but did not stop a recovery in a market that may soon regain more support from central banks.

Fortescue shares lost 10.94 per cent to $18.57 on Monday while the wider market closed little changed after earlier trading more than one per cent lower.

The iron ore miner's loss is due to the bumper final dividend of $2.11 per share it last month promised shareholders.

ASX investors appeared to move on from last week's disappointing US jobs figures to a conundrum facing Reserve Bank officials on Tuesday.

Board members are unlikely to move the cash rate from a record low 0.1 per cent.

Yet there is less certainty over the plan for bond purchases.

The RBA has scheduled easing bond buying from $5 billion per week to $4 billion per week from September.

However millions of people in the ACT, NSW and Victoria continue enduring lockdowns which are shrinking the economy.

Betashares chief economist David Bassanese said he believed the RBA would delay tapering bond purchases.

The heightened economic uncertainty made it hard to see the central bank sticking to its plan, he said.

Experts are divided on the implications for investors. Mr Bassanese said he did not think the decision would affect the economy or markets too much.

Last week, Tribecca Investment Partners portfolio manager Jun Bei Liu said the decision was important as investors need the economy to do well.

Investors may also benefit from the disappointing US jobs data which dampened the mood on Wall Street late last week.

IG Markets analyst Kyle Rodda noted investors would be less fearful of the US Federal Reserve soon tapering its bond buying in view of the data.

Federal Reserve Chairman Jerome Powell has said there needs to be substantial progress in employment before the central bank eases support.

Australian and US markets remain near record highs due to low interest rates amid the pandemic.

There will be no trade in the US or Canada tonight due to public holidays.

In Australia, the benchmark S&P/ASX200 index closed higher by 5.6 points, or 0.07 per cent, to 7528.5.

The All Ordinaries closed lower by 2.9 points, or 0.04 per cent, to 7823.8.

Information technology shares proved best, while energy and materials fared worst.

The energy losses come after oil exporter Saudi Arabia slashed crude prices for Asia, signalling global markets are well supplied.

Shares in clothing retail group Mosaic Brands jumped almost 20 per cent after its plan to raise $32 million through convertible notes.

The owner of Noni B and Rockmans said the funds would support its balance sheet until lockdowns are eased.

A hospitality provider is suing insurer IAG for not covering financial losses caused by COVID-19.

IAG and other insurers are mounting a separate challenge to the court to avoid having to pay out such losses.

IAG shares dropped early but improved and closed higher by 0.93 per cent to $5.45.

Santos and Oil Search are extending the due diligence period for their proposed merger by a week.

Santos last month proposed buying all shares in the energy provider for 0.6275 Santos shares per Oil Search share.

The due diligence period will end on September 13.

Santos shares were lower by 1.76 per cent to $6.14.

Oil Search shares were down 2.35 per cent to $3.74.

In mining, BHP, BlueScope Steel and Rio Tinto lost less than one per cent.

In banking, ANZ, the Commonwealth and NAB all gained by less than one per cent. Westpac closed lower by 0.12 per cent.

The Australian dollar was buying 74.38 US cents at 1728 AEST, higher than 74.21 US cents at Friday's close.

ON THE ASX

* The benchmark S&P/ASX200 index closed higher by 5.6 points, or 0.07 per cent, to 7528.5 on Monday.

* The All Ordinaries closed lower by 2.9 points, or 0.04 per cent, to 7823.8.

* At 1728 AEST, the SPI200 futures index was higher by eight points, or 0.11 per cent, to 7530 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 74.38 US cents, from 74.21 cents on Friday

* 81.73 Japanese yen, from 81.65 yen

* 62.68 Euro cents, from 62.48 cents

* 53.71 British pence, from 53.68 pence

* 104.11 NZ cents, from 104.19 cents.

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