The S&P/ASX 200 (ASX: XJO) followed global markets lower to begin the week, falling 1.8% after being as much as 2% lower during the session.
CBA sells insurance
Among the most significant detractors was the Commonwealth Bank of Australia, with Australia’s largest company falling more than 5%.
The sell-off was primarily due to the about-turn of the Federal Reserve, with banks amongst the biggest winners of the vaccine recovery, but management also announced the sale of its General Insurance business, CommInsure.
The group agreed to a sale price of $625 million for the massive insurer to South African-based Hollard Group, with commissions to continue for many years. The sale will represent a profit of around $90 million and marks the final step in Matt Comyn’s simplification strategy.
Insurance was the 13th divestment the company has made since 2017 and opens the opportunity for a $5 billion return of capital to investors.
Defensive names resilient
The value recovery may well be over before it began, with key defensive names Woolworths Group Ltd (ASX: WOW) and CSL Limited (ASX: CSL) among the only stocks to hold their ground on the basis of their strong, consistent and less cyclical earnings. Consumer staples and IT were the only sectors to deliver positive returns, up 0.2% each.
Boral selling building products
Retail sales came in well below expectations in May, delivering growth of just 0.1% compared to the 0.4% expected. The culprit was the ‘snap’ Victorian lockdowns, which sent retail spending down 1.5% in the state for the month alone.
Outside of Victoria, growth was stronger but by no means the buoyant level predicted by economists in 2020.
Boral Limited (ASX: BLD) was another rare winner, jumping over 1.3% after agreeing to sell its North American building products business to Westlake Chemical Corp for $2.9 billion.
This was well ahead of the $1.9 billion that domestic analysts had valued the company and an unexpected event for predatory Seven Group Holdings Ltd (ASX: SVW), which continues with its low ball $6.50 offer.
Retail trade bit by Victorian lockdown
Retail sales came in well below expectations in May, delivering growth of just 0.1% compared to the 0.4% expected. The culprit was the ‘snap’ Victorian lockdowns, which sent retail spending down 1.5% in the state for the month alone.
Outside of Victoria, growth was stronger but by no means the buoyant level predicted by economists in 2020.
ME Bank deals approved
Finally, recent deals have been closed with the Foreign Investment Review Board approving the acquisition of telecommunications group Vocus Group Ltd (ASX: VOC) by Aware Super and Macquarie’s Infrastructure and Real Asset division; and Bank of Queensland Limited (ASX: BOQ) receiving the Treasurer’s approval for its purchase of ME Bank.
ASX 200 today
The ASX 200 is expected to rebound on Tuesday, with the latest SPI futures pointing to a positive open. For all the latest, check out Rask Media’s US stock market report.