ASX weakens as travel stocks fall on Brisbane lockdown

Brisbane lockdown hits ASX, Afterpay (ASX:APT) falls to three month low, travel stocks struggle

The ASX200 (ASX:XJO) gave up a strong opening on US stimulus, ultimately finishing 0.1% lower after the Queensland Government announced a three-day lockdown of the city after community transmission of the UK COVID-19 variant was confirmed.

The retail sector fell on the news, with Webjet (ASX:WEB) and Flight Centre (ASX:FLT) bearing the brunt of cancelled holidays, down 1.9% respectively.

The materials sector rallied and the energy sector fell on news that the Suez Canal blockage was almost cleared with business as usual to return.

The domestic ‘technology’ sector was the worst performing, falling 2.8% as Afterpay (ASX:APT) fell 4.8% to a three month low on valuation concerns.

Real estate platform Domain Group (ASX:DHG) fell by the same amount after key competitor REA Group (ASX:REA) announced an acquisition offer for CBA-backed mortgage broker Mortgage Choice (ASX:MOC).

The offer values the company at $244 million, a 66% premium to the pre-offer price, with shares jumping 62.5% on the news.

Treasury Wine (ASX:TWE) drained, Tabcorp (ASX:TAH) rebuffs offers, AMP (ASX:AMP) getting clearer

Embattled wealth manager AMP shares fell 3.4% after the exclusive due diligence period to Ares Capital for the purchase of a portion of AMP Capital came to an end.

The selloff came despite management confirming Ares remains interested in the entire business unit; professional investors seem to be tired of the slow progress.

Platform competitor Netwealth (ASX:NWL) continued to tank after last week’s news of renegotiation of the all-important cash rates they receive on account balances, with Hub 24 (ASX:HUB) falling 3.8% as well.

The worst was confirmed for Treasury Wine (ASX:TWE) after the Chinese Government legislated the 175.6% tariff and anti-dumping penalty, with the tax to remain in place for at least five years.

Management reiterated that it may take up to three years to divert the $500 million in products previously sold to China each year.

Tabcorp (ASX:TAH) rebuffed unsolicited offers for their wagering and media businesses, citing that each of them undervalues the business whilst also flagging the formalisation of a ‘strategic review’ in a likely effort to stimulate a bidding war.

Suez Canal freed, markets weaker, financial and energy hit amid hedge fund selloff

The news of the weekend was the huge selling pressure placed onto a number of US and Chinese companies as a little-known hedge fund manager was forced to liquidate their positions.

According to reports, the C$20 billion Archegos Capital was this week’s subject to a margin call across many of the largest positions in companies like ViacomCBS, Baidu, and Tencent, which sent their share prices down significantly.

The cause was Archegos’ strategy of establishing positions through highly leveraged margin loans or contracts for difference, which allow a much larger holding in return for a small amount of collateral.

Unable to settle the margin calls, the fund’s bankers were forced to step in, with the likes of Nomura Holdings (TYO:8604) and Credit Suisse (SWX:CSGN) falling around 14% each after flagging significant losses on their exposure.

The result was a weak day for the Nasdaq, down 0.7%, and a flat finish for the S&P500. The Dow Jones benefitted from a jump in Boeing (NYSE:BA) shares after Southwest Airlines ordered another 100 737 Max Aircraft, sending the share price up 2.4%.

The Inside Adviser