Gold miners, CBA weigh on struggling ASX

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NAB strategists cautioned that “gold’s rise is not a one-way bet; the July US non-farm payrolls data (recording 1.76 million new jobs) did slightly dampen the gold price, reflecting outcomes better than expectations.”

But the economic news continues to be patchy, and data out on Wednesday showed that wage growth in Australia slumped, rising just 0.2 per cent in the June quarter.

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Gold miners, CBA weigh on struggling ASX

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“The slowdown in wage cost index growth is important because this series isn’t inherently volatile,” said Citi’s Josh Williamson. “It also excludes JobKeeper and shows what COVID-19 and restrictions have done to the price of labour.”

The Westpac-MI monthly consumer sentiment index dropped to 79.5 in August, almost back to its April record low.

Gold miners, CBA weigh on struggling ASX

“Sentiment on the labour market deteriorated further with unemployment expectations rising by 14.6 per cent,” Mr Williamson said. “The increase in pessimism reflects the survey period of August 3 to August 8, which included the announcement of the stage four lockdowns in Victoria.

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“Weaker soft data is an early warning that hard activity data could slow. We estimate the lockdown in Victoria to cost around $15 billion to $20 billion, with national GDP growth forecast to decline 1 per cent quarter on quarter in Q3.”

Banks are closely leveraged to economic growth and Commonwealth Bank reported an 11.3 per cent drop in full-year cash profit to $7.3 billion, after lifting provisions against loan losses as it navigates the COVID-19 crisis.

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The banking giant revealed it would pay a 98¢ final dividend, which fell a long way below the $2.31 it paid shareholders for the same period a year ago, but exceeded market forecasts for a dividend of 92¢.

CBA shares fell 0.5 per cent to $74.34. The other banks were higher, however, with National Australia Bank up 2.2 per cent at $18.28, Australia and New Zealand Bank up 2 per cent at $18.85 and Westpac up 2.3 per cent at $18.19.

The financial sector was the best performer of the session, up 15.687 points, with miners the worst, shedding 20.8 points. Gold miners slumped, as Northern Star fell 5.4 per cent to $14.50, Evolution fell 5.3 per cent to $5.54 and Silver Lake fell 5.9 per cent to $2.22.

Iron ore majors were also lower, with BHP down 0.7 per cent to $39.91, Fortescue Metals down 1.4 per cent at $18.13 and Rio Tinto lost 1.4 per cent to $101.40.

Away from the banks and miners. Seek Group dropped 8.6 per cent to $19.58 after swinging to a net loss of $111.7 million, from a profit of $180.3 million a year ago, and saying that it would not pay a final dividend.

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SkyCity fell 3.9 per cent to $2.25 after telling shareholders its casino and entertainment facilities in Auckland will be closed from Wednesday after the New Zealand government reinstated “alert level 3” restrictions across the city.

Magellan Financial Group rose 2.8 per cent to $63.41 after reporting 25 per cent growth in management fees and a 3 per cent drop in performance fees, defying volatile markets to grow funds under management by 26 per cent.

Downer EDI rose 2.9 per cent to $4.30. It reported a financial year 2020 net loss of $155.7 million, compared to a profit of $276.3 million a year ago. Downer didn’t declare a final dividend or provide earnings guidance for financial year 2021.

Transurban dropped 1.1 per cent to $13.78 after reporting that its earnings fell 6.4 per cent to $1.88 billion after COVID-19 hit daily traffic. The toll road operator reported a statutory loss of $153 million following a statutory profit of $170 million in the same period last year.

The Evans Dixon-managed New Energy Solar plunged 9.8 per cent to 92¢ after writing down its solar assets by up to 10 per cent while announcing further delays in asset sales

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