Sydney Airport has rejected a more than $22 billion takeover bid from a consortium of infrastructure funds, as worries about the economic impact of Sydney's lockdown have weighed on the Australian share market. 

The operator of Australia's largest airport said the board had unanimously agreed the $22.26 billion bid undervalued the airport and was not in the best interests of shareholders.

The takeover offer from the Sydney Aviation Alliance, a consortium involving IFM Investors, QSuper and Global Infrastructure Partners, offered $8.25 a share. 

But the board said the buyout plan was opportunistic because the value of the company had been hit by the coronavirus pandemic which had disrupted global aviation and impacted the share prices of travel stocks.

"Sydney Airport is a well-managed and capitalised asset with a long-term concession lease," it said.

The board said it recognised that Sydney Airport's share price was likely to trade below the takeover offer in the short term. 

The airport has a core aeronautical business as well as retail space, property, car parking and ground-transport revenue, but its revenue has slumped because of the closure of international borders and coronavirus lockdowns.

The airport's board said the company had rapidly adapted to the COVID-19 environment.

If the purchase went ahead it would be one of Australia's biggest buyout deals, with record-low interest rates fuelling a takeover frenzy as investors look to capitalise on the travel sector when international borders reopen.

There  are also reports that Macquarie Group is looking to make a rival bid for the airport, one of Australia's most important infrastructure assets. 

Sydney Airport shares fell on the open but at 1:00pm AEST were up 0.6 per cent to $7.85.

And electricity infrastructure firm Spark Infrastructure rejected a $4.9 billion takeover bid from private equity firm KKR and the Ontario Teachers' Pension Plan. 

Its shares jumped 6.9 per cent to $2.65 at 1:00pm AEST.

ASX loses ground

The Australian sharemarket was lower in lunchtime trade as investors worried about the Sydney lockdown despite good economic news showing the unemployment rate had dropped to 4.9 per cent last month.

Oil stocks also weighed on the market after a big drop in oil prices overnight on concerns about oversupply.

The All Ordinaries index fell 0.2 per cent to 7,620. 

The ASX 200 index was also down one fifth of a per cent to 7,341, but was still trading near record highs.

Most sectors were in the red, led down by education firms, industrials stocks, technology and banks, while miners and utilities were higher.

Among the gainers were car accessories firm ARB Corporation (+8pc) and building materials supplier CSR (+3.7pc). Whitehaven Coal (+2.5pc) rose as it predicted strong demand and higher prices despite China's ban on Australian coal.

Going down were buy now, pay later firm Zip (-4.6pc), and travel firms Corporate Travel Management (-3.7pc) and Webjet (-2.5pc).

The Australian dollar was down 0.3 per cent to 74.57 US cents after new figures showed China's economy expanded slower than expected over the June quarter.

The Chinese economy expanded by 7.9 per cent on an annual basis over the June quarter amid a rise in coronavirus cases, higher raw-material costs and a reduction in manufacturing.

That is a big slowdown from the 18.3 per cent annual growth rate recorded over the March quarter as the economy bounced back from the coronavirus pandemic shutdown last year.

Federal Reserve keeps money flowing

US stocks ended mainly higher after the US central bank chairman said the Federal Reserve is still some way off winding back its massive stimulus program despite a surge in inflation last month. 

Federal Reserve Chairman Jerome Powell reiterated in a statement to the US Congress that the current rise in consumer prices was likely to be temporary with household spending rising at a rapid rate, strong demand for housing and solid business investment.

He said that monetary policy will deliver powerful support until the recovery is complete and there was still a long way to go for the US employment market. 

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His comments come a day after economic data showed that US inflation hit its highest in 13 years last month. 

The Federal Reserve expects to increase interest rates sooner rather than later. 

New record for S&P 500 

The S&P 500 and the Dow Jones index ended higher after the reassuring comments from the  Federal Reserve chairman. 

Utilities, real estate and consumer staples were the best performers on the S&P 500, which briefly hit a new record high during the session. 

It rose 0.1 per cent to end at 4,374, the Dow Jones index gained 0.1 per cent as well to 34,933 and the Nasdaq dipped 0.2 per cent to 14,645.

Apple shares hit a record high of $US149.57 after Bloomberg reported the IT giant will launch a buy now, pay later service and that the company wants suppliers to increase production of its upcoming iPhone by one fifth.

PayPal which yesterday launched a BNPL product in Australia saw its shares fall more than 0.1 per cent to $US300.75. 

Microsoft closed at a record high after saying it will offer its Windows operating system as a cloud based service.

Bank of America fell after it outlined the impact of low interest rates on its bottom line despite a surge in net income to nearly $US9 billion in the second quarter.

Wells Fargo and Citigroup also made profits over the quarter.

Spot gold jumped 1.1 per cent to $US1827.06 an ounce.

Brent crude oil fell 2.5 per cent to $US74.58 a barrel after a report that major oil producers group OPEC were nearing a compromise deal to lift output.

ABC/Reuters