Why the ASX 200 gave up most of its gains on Thursday
‘Given its traded in the slipstream of US indices this week, the turn lower in US futures precipitated a drop for the ASX200 today.'
ASX 200 Thursday market wrap, Myer share price dives 17%
Buoyed by optimism from Wall Street overnight, the ASX 200 benchmark opened higher on Thursday – trading up to the 5,955.70 point level within the first hour of trade.
The Aussie benchmark eventually gave back the majority of those gains as the session wore on – finishing out the day at the 5,908 point level, well off the intraday high achieved during the morning session.
In spite of that volatility and as is always the case, there were pockets of optimism during the session, with Clinuvel, Goldroad and Vocus the best performing Australian equities; while Resolute, Mondale, and Scentre were the worst performing.
Myer witnessed even more pronounced share price declines – finishing out the session down 17% – after releasing what proved to be an evidently disappointing set of FY20 results to the market. Specifically, the iconic retailer reported that total sales had fallen 15.8% to $2,519.4 million in fiscal 2020; while earnings (EBITDA) dropped by a more substantial 41.6%, to $93.5 million.
Overall, the company posted a net loss after tax of $11.3 million.
Positively at least, Myer saw its online sales surge 61.1% to $422.5 million in FY20, with Myer's CEO and MD John King stressing that 'During the past two years, Myer has undertaken significant improvements to the website including enhancing infrastructure and peak capacity and improved search and check out functionality.'
Though online sales growth ranks as a distinct positive for the retailer, analysts from Citibank – who have a high risk, Buy rating on the stock, said:
‘We expect FY21 earnings to remain under pressure given their category mix and lack of wage subsidies beyond September 2020.’
Looking to explain what drove today’s broader market price action, IG Market Analyst, Kyle Rodda, postulated that:
‘Given its traded in the slipstream of US indices this week, the turn lower in US futures precipitated a drop for the ASX200 today. Like broader Asian markets, it was strong out of the gates for the index. But the momentum really failed to hold as the session wore-on.’
Before the market closed, Mr Rodda added that with:
‘The index is trading 0.1 per cent higher at time of writing, with the index looking vulnerable to further downside moving into the close, as support at 5900 gives way. For reasons that aren’t perfectly clear, it’s been the COVID-19 sensitive sectors that have weighed on the market.’
US futures in focus
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