ASX 200 gives up rally to finish Thursday’s session flat

Late rally, then late slide

ASX 200 shares continued to be dominated by oil price new as Brent crude’s rebound back above US$20 brought some risk appetite back into the market.

But it was another topsy-turvy affair with the energy and healthcare sectors swapping roles as lifters and draggers.

The benchmark ASX 200 started Wednesday’s session having lost along 5% across the previous two sessions. Early on, it looked like more of the same with the ASX 200 down 2.3%.

But then a rally started that had the index in modestly positive territory for a moment, before finishing Wednesday’s session flat at 5,221.20 points.

On Thursday, the reverse happened. Positive momentum had the ASX 200 up over 1%, before the bears took over to bring the index back to 5,217.10 points, down less than 0.1%.

On the economic data front, there was the Commonwealth Bank’s Purchasing Manager’s Index which showed a collapse in the services sector - more than expected and to a greater extent that manufacturing.

Wednesday’s heroes are Thursday’s villains

In spite of all this, all the attention was on energy. Santos, Australia’s second largest independent gas producer, surged 7.2% on Thursday after telling investors it was in a financial position to ride out the oil price crash.

The energy giant reported its first quarter results, which included a ‘strong’ operational performance with US$265 million (A$420.7 million) of free cash flow.

‘The current environment is a time for discipline,’ said Santos chief executive Kevin Gallagher, who has targeted a breakeven oil price for free cash flow of just US$25 a barrel.

Santos finished Thursday’s session at $4.28, up 6.2% thanks to Thursday’s rally. The rest of the energy sector was helped with Woodside Petroleum finishing up 0.3% to $19.97 and Oil Search flat at $2.49.

Beach Energy, which was one of the worst performers on Wednesday after its quarterly update, finished at $1.32, up 1.9% for the day.

Lynas, the world's largest rare earths miner outside China, rocketed on Thursday after telling the market the US military would give it initial funding for a heavy rare earths separation facility in Texas. Lynas ended Thursday’s session at $1.64, up 11.9% since Tuesday’s close.

A2 Milk continued to trade around all-time highs after telling the market to expect revenue of NZD$1.7-NZD$1.75 billion for full-year 2020 with earnings margins to lift to 31-32%. A2 has benefited from stockpiling amid the coronavirus. It’s shares finished Thursday at $18.60.

The ASX 200 may have been able to hold its early gains on Thursday had it not been for the healthcare shares that dragged the index into the red. On Wednesday it was the reverse.

Blood plasma heavyweight CSL lost ground late in the session. The healthcare giant lost 0.9% from Tuesday’s close to finish at $304.77.

Meanwhile, Ramsay Health Care lost 6.1% to close $60.59 after launching a $1.2 billion capital raise.

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