Telstra's biggest plunge in more than six years weighed on investor sentiment on Thursday, but the overall market still managed to eke out a small gain.
In a see-saw session, the benchmark S&P;/ASX200 added just 0.1 per cent to 5816.3, after rising as high as 5833.2 in early trade, its highest in 21 months. The local market initially followed strong leads from Wall Street, where major indices once again closed at record highs, but rapidly lost ground.
Katana Asset Management portfolio manager Romano Sala Tenna said miners like South32 had reported good results, but these had largely already been baked into share prices. As for the rest of the market, he said the day's falls were probably a case of traders testing the market's recent levels.
"In the last few weeks, the markets put on points pretty quickly." he said. "The 5850 level is quite important technically. If the market can hold onto that level, then there are expectations of another upward leg to come."
"And there's certainly some profit-taking going on." Also potentially weighing on the market were Dow futures, which were lower at the end of the Australian session, indicating some losses at the start opf trade on Wall Street, Mr Tenna said.
The day's biggest loser was Telstra, with investors unimpressed by the telecommunication company's drop in net profit to $1.79 billion. A sell-off pushed its share price down 6.6 per cent to $4.85, weighing on the entire bourse
Also heavily punished was Magellan Financial Group, which shed 4.5 per cent after it posted a 20 per cent drop in first-half net profit despite an increase in funds under management.
Among other companies reporting on Thursday and swaying the index were Origin, which dropped 2.2 per cent, and Sydney Airport, which lost 2.1 per cent.
Supporting the market was Domino's, the day's biggest gainer, which rose 7.7 per cent after posting heaving falls on Wednesday. The pizza firm has been under pressure over the profitability of its franchisees. Whitehaven Coal also rose strongly on expectations China may reinstate coal production limits, rising 5.76 per cent. Also helping the index were pharmaceutical companies. Plasma manufacturer CSL was up 3.7 per cent, while bionic ear maker Cochlear in heavy volumes added 4.5 per cent.
With the exception of Magellan, the financial sector was a key part of the index holding on to some gains. Thee big banks traded modestly higher, with ANZ up 0.8 per cent, NAB rising 0.7 per cent, Westpac adding 1.1 per cent and the Commonwealth Bank closing 0.7 per cent higher. Macquarie Group rose 0.7 per cent.
Stock watch: Slater and Gordon
Shares in embattled law firm Slater and Gordon fell 25.9 per cent to 20¢ after the company confirmed the existence of a recapitisation plan with its lenders, required as the debt it owes exceeds the value of the business. Slater and Gordon shares hit a high of $7.07 in 2015, but have rapidly trended lower after accounting issues were uncovered shortly after its $1 billion purchase of UK firm Quindell. The company also revealed on Thursday that revenue from its Australian business would be lower than expected in first-half 2017, due to "negative sentiment about the business". The company's market capitalisation has hit a new low of $70.5 million.
Market movers
Employment data
Jobs numbers for January showed a big jump in part-time and an almost equally big fall in full-time roles. A fall in the participation rate has helped the jobless figure drop to 5.7 per cent from 5.8 per cent. Economists had forecast the jobless rate to hold steady. The ABS data shows a 44,800 fall in full-time employment but 58,300 more part-time jobs. The total employment change of 13,500 new jobs is similar to the December figure, but the composition is very different: in that month FT jobs increased 9300 and part-time roles also added 4200. The participation rate dropped slightly to 64.6 per cent from 64.7 per cent.
US inflation
US inflation hit a five-year high and retail sales strengthened, triggering traders to up their bets to an over 40 per cent chance that that Federal Reserve will raise interest rates next month. The consumer price index rose at an annual pace of 2.5 per cent in January — the highest since March 2012 — and was boosted by a rebound in oil prices. Inflation was up 0.6 per cent for the month, above the consensus forecast of 0.3 per cent and the highest since February 2013. Treasuries fell, driving two-year yields to the highest level this year.
Telstra
The country's biggest telecommunications provider, Telstra Corp, said net profit for the December half slumped by 14.4 per cent to $1.791 billion on revenue of $12.8 billion, down 6.4 per cent on a year ago. Telstra, which has retained its crown as Australia's most valuable brand, will pay an interim dividend of 15.5c a share on March 31. The company this month launched the world's first Gigabit LTE network, capable of downloading data up to 10 times faster than the maximum a home user can reach on the NBN.
Asian shares
Asian stocks edged to new 19-month highs on Thursday with gains underpinned by an ongoing rally on Wall Street while the dollar came in for a bout of profit-taking after its recent bounce.The Japanese Topix was down 3.2 per cent. The Hang Seng was 0.4 higher. Some investors said markets were looking slightly overvalued from a technical perspective after the bounce in recent weeks. For example, on a relative strength index (RSI), the MSCI Asia-ex Japan index was at its most overbought levels since 2015