Shares suffered a dour start to the trading week as BlueScope Steel became this earnings season's latest victim, while selling in bluechips Telstra and CSL also weighed on the ASX.
The benchmark S&P/ASX 200 index fell 21 points, or 0.4 per cent, to 5726, after hovering near 5700 points and the bottom of a 100-point range that has held for some months.
Investors had hoped an upbeat earnings season would help lift the sharemarket, but "it has been an unambiguously disappointing run of results thus far," JP Morgan equities strategist Jason Steed observed.
An ambiguous lead from Wall St leading into Monday's open allowed investors to concentrate on another busy session of earnings releases and dramatic share price moves.
BlueScope, which had been one of the ASX's top performers this year, tumbled 22 per cent after the steel manufacturer revealed its strongest profits since 2005 but warned of falling profit margins in its US business. That more downbeat management assessment for this financial year suggested a 20 per cent downgrade to consensus expectations, according to Citi analysts.
Vocus plunged 15 per cent after private equity players abandoned takeover bids and the telco simultaneously downgraded its earnings outlook.
Fortescue Metals revealed a bumper profit result and lifted its dividend, buoyed by continued strength in the iron ore price. The miner said fatter payments may follow.
The stock, which erased most of this year's losses with an advance of 6.4 per cent, "remains acutely exposed to iron-ore price movements," RBC Capital Markets analyst Paul Hissey wrote in a note to clients. Meanwhile, Citi analysts upgraded Fortescue to "neutral" from "sell".
BHP Billiton shares advanced 1.2 per cent in anticipation of its annual earnings announcement on Tuesday in which the giant miner is expected to almost triple dividend payments, on Bloomberg forecasts.
G8 Education was the performing stock in the top 200, jumping 8.9 per cent despite saying the company telling investors that wages growth and the federal government's cap on benefits have led to fewer children going to childcare centres. Alongside a half-year profits announcement, management talk of a change to the company's dividend policy may have buoyed the stock.
Westpac's quarterly trading update helped the bank eke out a 0.3 per cent gain on Monday, while fellow lender ANZ ended the day flat, NAB dropped 0.5 per cent and CBA fell 0.9 per cent. Telstra lost another 0.8 per cent while CSL slipped 1.5 per cent.
Stock watch
Spark New Zealand
As shareholders continue to flee Telstra after last week's big dividend cut, Spark New Zealand is a good alternative for income-hungry investors, Morgan Stanley analysts believe. "Spark is our preferred dividend yield play in Australia and New Zealand telcos," they wrote. "Continuing capital management was confirmed in the guidance [on Friday] for a FY18 dividend-per-share of 25??". That payout estimate implies a dividend yield of 6.4 per cent, "the highest among peers in our coverage universe, for what we consider to be below-average risk". The analysts expect "little or no" earnings growth over the year ahead, "but that's OK, because Spark is not a growth story, it's a dividend yield story, its shares trade like a bond proxy".
MARKET MOVERS
Iron ore
China's iron ore futures rose for a third day on Monday, soaring close to 7 per cent, fuelled by concerns of shortages of high-grade iron ore and before curbs on futures purchases come into force. The Dalian Commodities Exchange on Friday said it will limit the daily purchases and sales of contracts for delivery in January and February to 6000 lots from Tuesday. Each lot is 100 tonnes of ore. The most-active iron ore futures on the Dalian Commodities Exchange climbed 6.8 percent to 597 yuan a tonne on Monday.
Aussie dollar
News on Friday night that US president Donald Trump had sacked his controversial adviser Steve Bannon "lifted risk appetite on hopes that this could see efforts redirected back to a business???friendly economic agenda," RBC Capital Markets currency strategist Sue Trinh said. The Aussie dollar, which had jumped back above 79 US cents in New York that night, eased lower on Monday, but still fetched US79.2?? in afternoon trade. Traders are overwhelmingly negative on the greenback's short-term prospects.
Earnings scorecard
JP Morgan analysts noted that the proportion of companies "missing" with their earnings rose to 26 per cent last week, outweighing the number of companies beating expectations, which have come in at 20 per cent. "Across the market as a whole, earnings revision trends reflect the paucity of positive results," they said. Only 8 per cent of the 86 companies that reported up to the end of last week had seen upgrades, they said. The result is a "painful" average downgrade to one-year forward earnings of 2 per cent.
Regional stocks
Asian stocks were mixed on Monday as investors monitored war drills scheduled for the Korean peninsula and prepared for a key meeting of global central bankers later this week. South Korea's benchmark KOSPI index was 0.2 per cent lower in late trade. South Korean President Moon Jae-in on Monday warned North Korea not to use his nation's latest round of annual military drills with the US as an excuse for any further provocations. Shares in Tokyo fell amid thin trading volumes, while they rose in Hong Kong and Shanghai.
