ASX falls after Wall Street extends losing streak; oil price falls
By Angus Thomson
Welcome to your five-minute update of the trading day, and how the experts are seeing it.
The numbers: The Australian sharemarket is down 0.2 per cent at lunchtime, losing 11.8 points to 6986.50 as of 12:51pm AEST.
Energy stocks were trading more than 3 per cent lower, while materials continued to slide. Communication services and information technology stocks were trading marginally higher.
The lifters: Clinuvel Pharmaceuticals jumped 16.53 per cent after reporting its sixth consecutive annual profit; Webjet rallied 10.8 per cent after predicting its operational cash surplus will exceed $100 million by September; and Tyro payments traded 9.63 per cent higher after Monday’s strong earnings report.
The laggards: Pointsbet was down 10.94 per cent after reporting a full-year loss; Woodside Energy fell 4 per cent despite reporting five-fold increase in profit on Tuesday; and Fortescue was down 3 per cent.
The lowdown: The Australian sharemarket opened lower on Wednesday morning as world markets grapple with the prospect that high interest rates are here to stay until inflation is brought under control.
Energy and materials stocks were providing a significant drag on the market at lunchtime, with heavyweights Woodside Energy, Santos, BHP and Fortescue all trading lower.
Webjet shares were trading 8.4 per cent higher in early trade after announcing its results.
Meanwhile, Harvey Norman shares were down after reporting a 3.6 per cent drop in full-year net profit, while PointsBet was trading around 3 per cent lower after posting a $267 million loss.
The dip on the local market follows a 1.1 per cent fall on the S&P 500, bringing Wall Street’s losses in the past three days to 5.1 per cent. The US benchmark index is down 3.5 per cent for the month, with one day left in August.
The Dow Jones Industrial Average dropped 1 per cent, while the Nasdaq composite lost 1.1 per cent. Smaller company stocks also fell, dragging the Russell 2000 1.5 per cent lower.
Markets have been weaker since Federal Reserve Chairman Jerome Powell indicated on Friday that the central bank will stick to its strategy of raising interest rates to try and tame the hottest inflation in four decades.
The latest wave of selling reflects a “hangover” from Powell’s speech last week and uncertainty ahead of the US Labor Department’s monthly employment report on Friday, said Megan Horneman, chief investment officer at Verdence Capital Advisors.
Markets are trying to get a better sense of “how far, how fast the Fed’s going to have to go” in slowing down the economy in order to fight inflation, she said.
Energy stocks fell along with oil prices, with Brent falling 4.9 per cent to fall below $US100 per barrel and WTI dropping 5 per cent to $US92.19 a barrel. Chevron dropped 2.4 per cent.
A strong report on the job market on Tuesday morning further diminished any hopes that the Fed would be able to ease up on its inflation-fighting policy. The higher rates the Fed is imposing are meant to keep inflation in check by slowing down the economy, including the pace of hiring.
The government reported that there were 11.2 million open jobs on the last day of July. That’s nearly two jobs for every unemployed person, on average. That number was up from 11 million in June, and June’s figure was also revised sharply higher.
Investors have been closely watching economic data for any additional signs that the economy is slowing down, or that inflation may be cooling or at least holding at its current level. Businesses and consumers have been hit hard by rising prices on everything from food to clothing, but recent declines in petrol prices have provided some relief.
The yield on the 10-year Treasury held steady at 3.11 per cent.
with AP
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