ASX dips in morning trade, weighed down by CSL after choppy Wall Street session
By Damian Troise, Alex Veiga and Angus Thomson
The Australian sharemarket dipped lower on Wednesday morning, with CSL results providing an early drag on the market.
The benchmark S&P/ASX 200 index was down 16 points to 7089.3 points at 11.01am AEST. Declines were led by the healthcare sector, which fell 2.3 per cent after biotech giant CSL reported a decline in profits and said it was behind schedule in plasma-collections growth.
Brambles jumped 4.2 per cent after releasing its full-year results. The pallet-maker expects supply chain disruptions, inflationary pressures and geopolitical unrest to continue in the current financial year, but said it could reach still a double-digit rise in earnings and revenue.
The lacklustre morning on the local bourse comes after the ASX powered to a nine-week high on Tuesday, buoyed by bumper results from market heavyweight BHP.
Wall Street overnight had another choppy trading session, though the S&P 500 and the Dow Jones Industrial Average did manage to close higher and extend their recent gains.
The S&P 500 rose 0.2 per cent, its third straight gain. The Dow Jones Industrial Average rose 0.7 per cent, taking its winning streak to a fifth day. The Nasdaq slipped 0.2 per cent.
Bond yields gained ground. The yield on the 10-year US Treasury rose to 2.81 per cent from 2.79 per cent late Monday.
The US market’s latest gyrations came as traders cautiously reviewed mostly encouraging financial results from major retailers.
Walmart jumped 5.1 per cent after the world’s largest brick and mortar retailer reported strong results that topped analysts’ forecasts. Home Depot rose 4.1 per cent after also reporting better-than-expected results. The gains from both companies did much of the heavy lifting for the Dow.
Technology, health care and energy stocks fell, limiting the broader market’s advance. Broadcom fell 1.3 per cent, Moderna slid 5 per cent for the biggest drop in the S&P 500 and Marathon Oil fell 1.1 per cent.
US crude oil prices fell 3.2 per cent overnight. European markets ended broadly higher and Asian markets closed mixed overnight.
Wall Street had its best month in a year-and-a-half in July, and the winning streak has been continuing into August partially on hopes that inflation is easing. The latest US government report on consumer prices showed that inflation in the world’s largest economy essentially stalled from June to July.
This week’s bumpy trading reflects at least partly a surge in “dip buyers,” or investors swooping in to buy stocks that have traded lower, said Randy Frederick, managing director of trading & derivatives at Charles Schwab.
“The dip buyers were just absent in the first half of the year, and whenever they did step in they got spanked every time,” he said. “That has changed now.”
Wall Street has been concerned that higher prices on everything from food to clothing could eventually stunt the US economy’s main engine of growth, consumer spending. Investors will get another update on the retail sector on Wednesday, when Target reports its result.
The retail reports are capping off the latest round of corporate earnings, which have been closely watched by investors trying to determine inflation’s impact on businesses and consumers, while trying to gauge how the Federal Reserve will react. The central bank is raising interest rates in an effort to slow down economic growth and rein in inflation, though it risks hitting the brakes too hard and veering the economy into a recession.
Investors are looking for any signs that inflation is peaking or cooling in the hopes that the Fed could ease its aggressive rate hike policy. The central bank in July raised its benchmark interest rate by three-quarters of a point for a second straight time. On Wednesday, Wall Street will get more details on the process behind that decision when the Fed releases minutes from that meeting.
Investors currently expect another half-percentage point increase at the Fed’s upcoming meeting in August, according to CME’s FedWatch tool.
AP
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