ASX falls over 1% ahead of Federal Budget 2021; tech stocks drag

Summary

  • The S&P/ASX200 was trading lower by 79 points or 1.10% at 7093 at the close.
  • Ten of 11 sectors traded in red, while Information Technology fell over 4%.
  • The top five losers on the ASX were PointsBet, Afterpay (ASX:APT), Redbubble, ZIP Co and Nearmap. 

The benchmark index ASX 200 was trading near day’s low at the close, weighed down by sharp losses in growth-focused tech stocks. The S&P/ASX200 was trading lower by 79 points or 1.10% at 7093, as caution prevailed in the market ahead of the Budget announcement this evening. The tech stocks were the biggest losers on the ASX, tracking weak cues from an overnight sell-off in growth-focused shares on Wall Street, led by Nearmap Ltd (ASX:NEA), WiseTech Global Ltd (ASX:WTC) and Afterpay (ASX:APT).

On the sectoral front, ten of 11 sectors are in red, while Information Technology is the worst performing, falling over 4%. Other sector that are trading lower includes Telecommunications Services, Consumer Discretionary, Information Technology, Industrials, A-REIT, Financials, Energy, Health Care and Utilities. Consumer Staples was only gainer on the ASX, up 0.7%.

Earlier today, the S&P/ASX200 opened in red, tracking weak cues from US market, which ended lower in overnight trade due to sell off in technology stocks. The benchmark index opened lower by 8 points or 0.11% at 7,164.70, on the day Australia’s federal budget 2021-22 is scheduled to be tabled in the evening.

The Federal Budget 2021 will be announced by Treasurer Josh Frydenberg at approximately 7.30 pm (AEST) today. Frydenberg, who will be presenting his second COVID Budget, is expected to increase spending on mental health support for new mothers and on screening for breast and cervical cancer as part of an AU$354 million women's health package. The government plans to provide incentives for the infrastructure sector in the federal budget. The government is likely to allocate over AU$10 billion for building roads and rail infrastructure.

Gainers and Losers

Image Source: ID 21042281 © Littlemacproductions | Megapixl.com

The worst performing stocks on the ASX are PointsBet Limited (ASX:PBH) and Afterpay (ASX:APT), which are down over 8%. Redbubble Ltd. (ASX:RBL), ZIP Co (ASX:Z1P) and Nearmap Ltd (ASX:NEA) were among other top losers.

On the other hand, Omni Bridgeway (ASX:OBL), IDP Education (ASX:IEL), Boral Limited (ASX:BLD), DEXUS Property Group (ASX:DXS) and Woolworths Group Ltd (ASX:WOW) were among notable gainers on ASX.

Shares in News

Image source: bluebay, Shutterstock

Shares of Omni Bridgeway (ASX:OBL) was top gainer on ASX, rising 2.4% to AU$3.83 after the firm confirmed that in full year 2021 it recognised AU$94 million from settlement of the Brisbane Floods class action. On Monday, the stock of the litigation funder rose as much as 9%, their biggest percentage gain since 25 November 2021.

The share price of Boral Limited (ASX:BLD) gained as much as 3% to AU$6.72 after the company told its shareholders to reject Seven Group Holdings’ AU$6.50 per share off-market takeover offer.

The share price of property group Mirvac Group (ASX:MGR) rose nearly 3% to the day’s high of AU$2.89 ahead of budget presentation in anticipation of better prospects as government plans to provide incentives for the infrastructure sector in budget 2021-22.

Shares of Brickworks Ltd (ASX:BKW) rose 2% to the intra-day high of AU$21.34 as stock benefitted from Budget related anticipation.

Share price of Starpharma Holdings Ltd. (ASX:SPL) dropped 2.5% to AU$0.045 after the company updated about the partnership between Harlequins with VIRALEZE™ , an antiviral nasal spray for COVID-19 developed by SPL.

Challenger Energy Limited (ASX:CEL) share price fell over 8% after the company extended the land position four-fold to around 80 km2 at its flagship Hualilan Gold Project in San Juan. The Company has acknowledged the receipt of a formal notification of the direct award of the 20.6 km2 Ayen Exploration Licence surrounding the present Hualilan Mining Licenses including the Hualilan Gold Project. Besides this, CEL has also received firm commitments for an AUD42.1 million under a placement that was strongly supported by domestic and global institutions.

Shares of Cobre (ASX:CBE) rose as much as 4.54% to AU$0.172 after the mineral exploration said that it has concluded the mobilisation to site of both Reverse Circulation (RC) and Diamond Core (DC) drill rigs on the Kitlanya East (KIT-E) project in Botswana.

The share price of Blaze International (ASX:BLZ) jumped 14% to hit a high of AU$0.041 after the company said it has inked separate and unrelated conditional share sale agreements for the acquisition of Hammerhead Exploration Pty Ltd and Iconic Minerals Pty Ltd. Hammerhead and Iconic collectively own six tenement applications in the Earaheedy Basin of Western Australia spanning over the immediate northern and western strike extension of the latest Zinc-Lead discovery of Rumble Resources Limited (ASX:RTR).

Jadar Resources (ASX:JDR) announced that the company has entered into an agreement with European Lithium (ASX:EUR) to collaborate on the Weinebene and Eastern Alps lithium projects in Austria. Following the announcement, stock of Jadar Resources was trading flat at AU$0.030, while European Lithium share price rose 1.75% to AU$0.058.

Share of Woolworths Group Limited (ASX:WOW) is up 1% at AU$40.88 amid report that the ACCC is seeking view on proposed WOW’s undertaking of 65% stake in PFD. The ACCC had outlined preliminary competition concerns through a statement of issues.

Health House International Limited (ASX:HHI) share price rose 5.88% at AU$0.180 after the company declared the proposed acquisition of CanPharma GmbH, subject to requisite approval.

Commodity Market

Crude oil prices slipped during mid-morning trade in Asia today as sentiments were dented after the World Health Organisation (WHO) called India's B-1617 COVID strain as a “variant of concern”. Brent July contract dropped 0.79% to US$67.78 per barrel, while the US West Texas Intermediate (WTI) was down 0.69% at US$64.47. On Monday, Brent crude closed 0.15% lower at US$68.19 a barrel, while US West Texas Intermediate (WTI) price dropped by 0.15% to $64.80 a barrel.

Gold prices edged higher on Tuesday as lower-than-expected US jobs data raised hopes that interest rate may remain low in near term, boosting investors’ appetite for yellow metal. The spot gold price was up 0.1% at US$1,837 an ounce.

Iron ore prices surged to another level overnight, rising around 8.6% to hit US$230 per tonne on skyrocketing steel prices in China. For the first time in history, the prices surged to this record level as the market's equilibrium is disturbed by robust demand from Chinese steelmaking industries and supply deficit.


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