The local sharemarket ended another big day of reporting season in the red, as a slide in miners led by Rio Tinto offset a number of positive earnings surprises.
The benchmark S&P;/ASX200 Index fell 0.4 per cent to 5784.7 points on Thursday, while the broader All Ordinaries Index was 0.3 per cent lower.
A number of major stocks, including Rio Tinto, AGL Energy and JB Hi-Fi, went ex-dividend, providing downward momentum to the market, said Patersons Securities economist Tony Farnham. "And BHP traded lower in its American trading session, so it was always going to start the day a bit lower."
The big miner shed 2.7 per cent on Wednesday's close, while Rio Tinto fell 5.5 per cent, making it the biggest drag on the index by virtue of its large market capitalisation. AGL and JB Hi-Fi lost 3.6 per cent and 2.3 per cent respectively.
"We've had quite a good run-up," Mr Farnham said. "Once that happens, the market needs a good reason to take a step further from there. At this particular point in time, there hasn't been a clear-cut reason to do so."
Capital expenditure numbers also disappointed on Thursday. "The bottom line for me is that we've got some way to go before we can confidently agree with the RBA governor that investment is on the way back."
Helping mitigate losses elsewhere was investment manager Perpetual, which delivered a 2 per cent increase in first-half net profit over the back fo rising equity markets - its share closed up 5.6 per cent.
Qantas and Crown Resorts also did their part, up 5.4 per cent and 7.9 per cent respectively after their results were welcomed by investors. Adelaide Brighton shares jumped 3.4 per cent after the construction materials supplier flagged 2017 sales volumes of cement and clinker are expected to rise.
The biggest drag on the index was Ardent Leisure, which shed 21.8 per cent after its profits more than halved. Sky Network Television and iSentia both added to the previous day's losses, down 7.5 per cent and 12.4 per cent respectively. Vocus Group gave up some of its gains from Wednesday, finishing Thursday down 4.4 per cent.
The big four banks finished mixed, with ANZ up 1.2 per cent, but Westpac, the Commonwealth Bank and NAB all losing around 0.3 per cent.
Outside the ASX200, payment software company Touchcorp rose 25.7 per cent after announcing a proposed full merger with payment protocol company Afterpay, in which it is currently a major investor.
Stock watch: Qantas
The flying kangaroo's shares jumped 5.4 per cent to $3.74 on Thursday despite a 7.5 per cent profit drop. It was a case of Qantas surprising on the upside - the earnings fall was smaller than analysts' expectations given an international price war over tickets. Qantas said it remained profitable despite the competition, and boasted it had the best margins of any airline in the world. CEO Alan Joyce lauded his cost-cutting program, an assessment shared by Standard & Poor's. "Despite the airline's more challenging operating environment, all operating segments, including the international business, continue to deliver positive underlying earnings before interest and tax," its analysts said. "In addition, Qantas' transformation program has achieved its milestones and, in our opinion, has underpinned the performance of both the domestic and international businesses."
Market movers
Capital expenditure
Capital expenditure numbers disappointed on Thursday. Fourth-quarter business investment fell 2.5 per cent, well over the expected 0.5 per cent. And the first estimate for investment in the coming financial year came in at $80.62 billion, indicating another slide in the year ahead. "The near-term outlook remains soft," said RBC Capital Markets' Michael Turner. There is no strong signal of a pick up in business investment." The Commonwealth Bank's Michael Blythe said "the good news is the downturn in mining capex is almost over". "What we need to see is bit of a pick up in the non-mining side."
Penalty rate decision
The Fair Work Commission on Thursday lowered Sunday penalty rates in retail, fast food, hospitality and pharmacy businesses. The controversial decision will anger Australia's union movement, which has invested heavily in a massive campaign to safeguard weekend penalty rates across the country. It fed through to many stocks, with Myer closing 2.8 per cent higher, while other retail stocks such as Premier Investments, Wesfarmers or Metcash posted more modest gains.
Local bond demand
The federal government was able to sell a record $11 billion of debt this week due to insatiable demand from local banks, calming market worries about the impact that losing its coveted triple-A rating could have on Australia's debt. The new November 2028 bond issue received a whopping $21 billion in bids at the clearing margin of 14 basis points over 10-year bond futures. The vast majority, or 85 per cent, of the issue was sold domestically, AOFM data showed, with some investors surprised by the light participation of investors outside Australia.
Hits and misses
Thursday marked the high-water mark of corporate earnings season, providing plenty of market momentum. Dreamworld operator Ardent Leisure's profit more than halved, and its shares shed 21.8 per cent. Atlas Iron swung to profit, but the heralded "turning point" for the miner didn't stop its share price plunging 9.3 per cent. Nine Entertainment shares rose 7.3 per cent despite the company posting a $236.9 million loss - largely due to hefty goodwill writedowns. Ramsay Health Care lifted net profit to $255.9 million and confirmed its CEO Chris Rex will retire after nine years - its shares closed down 3.2 per cent.