ASX dips but travel stocks jump

The ASX closed marginally lower but investors piled into travel stocks, encouraged by the coronavirus vaccine rollout.

The Australian sharemarket fell slightly but travel stocks jumped as the COVID-19 vaccine rollout began while the big miners hit record levels thanks to higher commodity prices.

The S&P/ASX200 closed 0.19 per cent lower at 6780.9 while the All Ordinaries Index dipped just 2.4 points to 7061.6.

OpenMarkets Group chief executive Ivan Tchourilov said the local bourse had a lacklustre lead from overseas but travel and tourism stocks enjoyed a solid day of gains with the vaccine rollout underway.

He said Webjet was a standout after their earnings report last week didn’t reveal any significant skeletons in the closet.

Shares in Webjet jumped 8.93 per cent to $5.37 while Corporate Travel Management advanced 8.29 per cent to $18.94, Flight Centre gained 7.15 per cent to $15.59 and Qantas appreciated 4.33 per cent to $4.82.

“Travel and tourism stocks are highly leveraged towards any evidence of an economic recovery, so news the vaccine is here is clearly being really well received,” Mr Tchourilov said.

“Investors are looking at ways they can play the recovery.”

Regional Express, however, backtracked 3.68 per cent to $1.70 after announcing it was axing five routes, pointing the finger at Qantas, saying its ‘predatory’ behaviour was worsening competition in the country’s aviation sector.

ThinkMarkets Australia analyst Carl Capolingua said it was a choppy session, trading in a really tight range.

“Outside of mining there wasn’t a great deal to cheer,” Mr Capolingua said.

“The moves to the upside in some metals last week were extreme.

“London Metals Exchange nickel was up 5.6 per cent, copper was up 7.5 per cent, and tin was up nearly 12 per cent. We’re talking six-year highs for nickel and nine-year highs for copper and tin.

“Iron ore prices were up 6 per cent last week, and they’re up another 2 per cent in Shanghai today.

“Stocks like BHP, Rio and FMG are at record highs, but those price gains have been more than compensated by earnings increases.”

Rio Tinto rose 3.64 per cent to $127.74, BHP added 3.34 per cent to $48.90 and Fortescue lifted 3.21 per cent to $24.74.

Mr Capolingua said the price to earnings ratio of the materials sector had fallen over the past month and that’s why share prices were rising.

“But I’m not sure how many mums and dads look at those price gains and realise just how many miners are cheaper than they were a month ago.”

Bank of Queensland announced it entered an agreement to acquire Members Equity Bank for $1.325bn in a bid to take on the big four.

“ME Bank is likely to become a core operating entity of the higher rated BoQ if the planned acquisition is completed as proposed,” S&P Global Ratings said.

Shares in BoQ are in a trading halt and were last priced at $8.41.

ANZ eased 0.41 per cent to $26.50, Commonwealth Bank gave up 0.74 per cent to $81.90, National Australia Bank retreated 2.15 per cent to $24.57 and Westpac shed 1.54 per cent to $23.72.

Fruit-growing giant Costa Group booked a 108.4 per cent surge in full year net profit to $59.4m, saying favourable market conditions were supported by positive demand and pricing, especially in the citrus, berry and avocado categories.

The company said it supplied produce without disruption during COVID-19 lockdowns and did not claim any JobKeeper, and while labour supply was an ongoing risk, it had been managed to date.

Citi said the earnings were better than consensus expectations.

“Long-term, the company is looking to grow its scale in citrus and develop new growing techniques in avocados. In addition, the balance sheet is positioned for bolt-on acquisitions as well,” Citi said.

Costa shares leapt 12.97 per cent to $4.53.

The Aussie dollar was fetching 78.79 US cents, 56.2 British pence and 64.98 Euro cents in afternoon trade.

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