The ASX was hit harder than expected in this morning’s trading. S&P/ASX-200 shed 1.5% to hit a four-month low of 7,159.60 after bouncing to 7,210 at open.
This decline has continued into midday, with the index dropping 114.00 points or 1.57% to 7,161.60 and crossing below its 125-day moving average.
The IT sector continues to be hard hit, experiencing broad-based falls. The Financials, Materials and Health Care sectors also dragged down the market.
- BHP fell 2.8%.
- CSL fell 2.2%.
- CBA lost 1.5%.
Bottom-performing stocks in this index are Pinnacle Investment Management Group Limited down 7.82% and Hub24 Limited down 7.52%.
The index has lost 1.85% for the last five days, but has gained 8.72% over the last year to date.
What’s up with the travel sector’s recovery?
Travel is clearly one of the sector’s that needs a leg up. This sector has been one of the hardest hit with domestic and international borders closed.
Here are some hard facts:
- Prior to COVID, the industry experienced year on year growth of 11% and maintained growth of 7.25% over the past five years.
- In 2018-19, Australians spent over $46 billion on international travel, representing the largest import sector of the Australian economy.
- 70% of this international travel was booked through Australian travel agents.
- Each year travel agents collect taxes worth $1 billion and contribute $28 billion nationally to the economy.
- This sector needs to survive and thrive again for the sake of the Australian economy.
AFTA chair Tom Mainwairing noted that Australia’s travel sector had been in hard lockdown for 600 days with no relief in sight until international travel normalises in 2022. 15,000 jobs are already lost and an ongoing financial lifeline is now critical, especially for travel agents.
“A third of our sector, 15,000 jobs, have been wiped out. We need help and we need it until international travel normalises so we are here as employers and to support travelling Australians.
"It’s simply not the case that everything returns to normal when the international travel ban is lifted. There will be a lag before flight capacity lifts and prices normalise and until then, we need support well into 2022.”
Whether that support comes soon or not remains to be seen, with the Federal Government saying today that it can’t continue to do any heavy lifting.
Vaccinations seem to be the key to re-opening quickly and putting businesses in the travel sector back on track.
No favours
All in the travel sector have been hit hard, but no favourites are being played.
As Qantas tries to recover, the ACCC is keeping a close eye on its move into the regional space.
The ACCC says it will be watching for "behaviours that impact the recovery of the domestic aviation sector and economy.”
Qantas, Virgin and Rex cancelled approximately 9,400 flights in June, the highest on record, followed by 9,350 cancellations in July.
The ACCC expects conditions to last for some time.
However, it will still be watching for behaviours it feels could slow down the recovery and will be acting on concerns from airlines that airports may seek to increase their charges to airlines in order to recover their lost profits from the pandemic.
"Such increases in airport charges could damage the vulnerable airline sector’s ability to recover, at the expense of both consumers and the economy," the ACCC said.
It is also looking closely at Qantas extending its dominance in regional areas.
"The airline group has grown its already expansive regional network reach since COVID-19 struck, launching 13 new regional routes in the June 2021 quarter alone.”
"The ACCC continues to investigate Qantas’ entry and expansion on certain routes and whether it raises competition concerns."
Will the travel industry look the same again?
On the small cap front
Touch Ventures Limited is up 41.25%, Red Dirt Metals Limited is up 31.75% and Wildcat Resources Limited is up 24% at time of writing.
Carnavale Resources Ltd (ASX:CAV) is up 16.67% having completed initial aircore drilling totalling 10,869 metres at its Ora Banda South Gold Project.
Castillo Copper Ltd (LSE:CCZ, FRA:7OR, ASX:CCZ) is up 6.25% after securing a 90-day option to acquire two highly prospective Australian lithium projects.
Other small caps of note:
- ALK +5.06%
- AZI +6.02%
- AZY +2.17%
- BGL +3.75%
- CV1 +2.78%
- CLE +20%
- EMP +8.7%
- HHR +6.82%
- INR +3.15%
- KKO +6.06%
- LOT +2.04%
- MAG +2.81%
- MOH +4.84%
- OKR +2.04%
- OPN +6.25%
- OBM +2.22%
- PVW +2.56%
- PXS +4%
- QML +2.94%
- RVR +2.94%
- SHH +10%
- SHP +6.33%
- TBN +15%
- TSC +10%
- WAK +5%
- ZLD +2.63%