Shares returned to normal trade on Tuesday after Monday’s ASX outage, posting a modest gain despite a plunge in TPG shares, while the spectre of key central bank meetings this week kept a lid on trading volumes.
The S&P/ASX 200 Index spent most of the day under water, before staging a late push higher. At close of trade the benchmark Index added 9 points, or 0.2 per cent, to 5303.6, while the broader All Ordinaries added 13 points, or 0.2 per cent, to 5223.3.
Driving much of the day’s weakness was a 21.6 per cent plunge in TPG Telecom shares after the company issued earnings guidance of between $820 million and $830 million for the 2016-17 financial year which missed market expectations.
It dragged the telco sector to the day’s worst performer, down 2.6 per cent, while Telstra was also hit by the negative sentiment, falling 1.5 per cent.
The big four banks added some support, with Commonwealth Bank of Australia and Westpac Banking Group both lifting 0.6 per cent.
The big miners also gained, rising despite persistent weakness in iron ore prices, which have not gained since September 2. BHP Billiton was the biggest lift for the market, adding 2.3 per cent, while Rio Tinto rose 1.6 per cent.
Stock Watch: TPG Telecom
Shares in TPG Telecom plummeted on Tuesday, following an earnings guidance that came in below market expectations. Investors fled the stock, and it dropped 21.4 per cent to close at $9.28, its lowest point since January. after a strong performance this year to date.
“TPG is a familiar story during the last reporting season. Leading into their report shares were trading at high valuations, with the market expecting continued significant earnings growth in FY17,” said Gary Huxtable, client adviser and strategist at Atlantic Pacific Securities.
“With such high expectations, it’s not surprising that a downgrade of guidance led to a sell off [on Tuesday] morning,” Huxtable said.
The telecommunications provider forecasted EBITDA to come in around $825 million for 2016/17, whereas market estimates were looking for $884 million.
The company also suggested capital expenditure will increase from $281 million in 2015-16 to between $370 million and $420 million. Nonetheless, TPG’s profit surged 71.6 per cent to $384.6 million thanks to the addition of iiNet’s revenue to the company’s portfolio.