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Twitter loses $3.4b in market value after Trump ban, ASX wipes out early gains

ABC Business logoABC Business 11/01/2021 By business reporter David Chau, wires
Donald Trump wearing a suit and tie: Twitter's decision to permanently ban Donald Trump's account was politically divisive. (ABC News: Ben Nelson) © Provided by ABC Business Twitter's decision to permanently ban Donald Trump's account was politically divisive. (ABC News: Ben Nelson)

The Australian share market has erased its early gains, as Wall Street dropped from record highs and Democrats moved to impeach US President Donald Trump for a second time.

The benchmark ASX 200 index closed 0.3 per cent lower at 6,679 points. The broader All Ordinaries also fell by a similar margin to 6,939.

Overall, the local share market is trading optimistically around its late-February levels, .

The Australian dollar was moderately weaker (-0.8pc) at 76.89 US cents.

Bitcoin fell (-2pc) to $US35,169 in the past 24 hours.

The volatile cryptocurrency jumped to its highest value ever ($US41,692) on Saturday, prompting some investors to cash out while they were still ahead.

Meanwhile, bets on a rebound in business activity in 2021, driven by COVID-19 vaccine rollouts, larger cheques and infrastructure spending under president-elect Joe Biden have boosted US markets to record levels.in recent months.

Investors have begun to shift their money from tech-heavy growth stocks towards stocks linked with an economic recovery (including banking, oil and travel).

Twitter tanks after Trump ban

Twitter's share price tumbled after the US company permanently suspended Mr Trump's widely-followed account, spurring concern among investors over the future regulation of social networks.

Its stock plunged as much as 12 per cent (or $US5 billion in market value), before it managed to recover about half of those losses overnight.

The San Francisco-based social media company said its suspension of Mr Trump's account, which had 88 million followers, was due to the risk of further violence following the storming of the US Capitol last week.

The attention drawn to Twitter increased investors' worries that it could be more exposed to regulation than its bigger rivals Facebook and Alphabet (the owner of Google and YouTube).

Friday's move, accompanied by suspensions for some of Mr Trump's supporters, was the first time Twitter had banned a head of state.

Apple, Alphabet and Amazon also suspended Parler, a social network favoured by many Trump supporters, from their app stores and Web-hosting services, effectively making the service inaccessible.

"These moves, whether you consider them justified or not, could well see them lose further users if they become seen as arbiters of what is considered politically correct or acceptable," said Michael Hewson, chief analyst at CMC Markets UK.

Other social media platforms, including Facebook, have issued similar bans on Mr Trump, but their share price did not fall as hard as Twitter's.

Twitter shares closed 6.4 per cent lower at $US48.18. In dollar terms, the company's market value dropped $3.4 billion ($US2.6b) overnight.

In comparison, Facebook shares fell (-4pc) to $US256.84, while Alphabet dropped (-2.3pc) to $US1,756.29.

Freedom of speech concerns

Republican politicians denounced the decision as an attempt to stifle conservative voices, and quell the President's right to free speech.

German Chancellor Angela Merkel, whose relations with Mr Trump have been frosty, has also criticised Twitter's ban and warned through a spokesman that legislators, not private companies, should decide on potential curbs to free expression.

Australian politicians have also weighed in, with Acting Prime Minister Michael McCormack accusing Twitter of applying double standards.

He disagreed with the social network's suspension of Mr Trump's account, particularly in light of Twitter's decision to leave online a doctored image, drawing attention to the alleged murders of civilians by Australian troops in Afghanistan.

Treasurer Josh Frydenberg said he "felt pretty uncomfortable" with the decision to de-platform Mr Trump.

However, Liberal backbencher Dave Sharma said Twitter made the "right decision on the facts", but said he was uncomfortable with "the precedent of big tech making decisions about whose speech, and which remarks, are censored and suppressed."

For the opposition, Labor leader Anthony Albanese said it was "about time" social media companies banned Mr Trump.

He also criticised Prime Minister Scott Morrison for failing to condemn Coalition backbencher George Christensen and others spreading mistruths on social media.

In November, Mr Christensen posted on Facebook: "I'm going to say it. Masks and lockdowns don't work", alongside an article he argued supported the point.

Best and worst performers on the ASX

Financials was the best performing sector, driven by NAB (+1.1pc), Bank of Queensland (+1.6pc), AMP (+0.6pc) and Westpac (+1pc).

However, the largest gains came from ARB Corp (+5.6pc), Rebel Sports' owner Super Retail Group (+5.5pc) and aerial imaging company Nearmap (+3.5pc).

Shares in ARB Corp surged after the company, which supplies four wheel drive accessories, gave a strong trading update — that its first-half sales revenue climbed (+21.6pc) to $284 million

Super Retail and Nearmap jumped after brokers (at UBS and RBC) upgraded their ratings to "buy" and "outperform", respectively.

The other strong performers were Suncorp (+3pc), Nine Entertainment (+3.1pc) and United Malt Group (+4.1pc).

PolyNovo shares tanked (-13pc) despite the company posting a 31 per cent surge in first-half sales. Its sales have slowed in recent months.

"In the short-term, forecasting sales will be challenging, particularly in the US, however the medium-term outlook is strong and we continue to see surgeons using and referring NovoSorb BTM (its burns treatment product) to their peers," PolyNovo managing director Paul Brennan said.

Tech company Altium dropped (-2.1pc) after reporting its first-half revenue fell 3 per cent to $US89.6 million.

In a statement, the maker of electronic design software blamed it on "extreme COVID conditions in the US and Europe", along with "challenging economic conditions, post COVID, in China for licence compliance activities".

Rounding out the list of worst performers were Magellan Financial (-3.1pc), Webjet (-2.5pc), OZ Minerals (-3.9pc) and Lynas Rare Earths (-2.9pc).

Profit taking while still ahead

On Wall Street, The Dow Jones index closed slightly lower (-0.3pc) at 31,009 points on Monday (local time).

The benchmark S&P 500 was down (-0.7pc) to 3,800, while the tech-heavy Nasdaq dropped (-1.3pc) to 13,036.

Since November, US markets had surged to record levels thanks to Moderna, Pfizer and AstraZeneca announcing positive vaccine results, and relief that the US election was not as close as initially feared.

Investors are now betting the Democrats (which now control the Presidency, House and Senate) will push for hundreds of billions of dollars in extra stimulus to help the US economy recover from its pandemic-driven slump.

"After a very quick run, people start to get a little bit nervous and take money off the table," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Boeing fell sharply (-1.5pc) after a 737-500 jet operated by Indonesian Sriwijaya Air crashed on Saturday, with 62 people on board.

Meanwhile, Brent crude slipped (-0.9pc) to $US55.48 a barrel, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns across the globe, as well as the stronger US greenback.

"The renewed concerns about demand due to very high numbers of new corona cases and further mobility restrictions, plus the stronger US dollar, are generating selling pressure," Commerzbank analyst Eugen Weinberg said.

Spot gold was slightly higher (+0.3pc) at $US1,851 an ounce.

ABC/Reuters


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