Australian shares open lower as BHP declines; JB Hi-Fi gains

Australian shares opened slightly lower on Tuesday as a fall in iron ore prices weighed on local miners and US futures pointed down, with Wall Street closed for a public holiday.

The S&P/ASX 200 fell 14.6 points, or 0.2 per cent, to 7373.6 at the open, with materials and utilities stocks leading the market lower. However, the local bourse pared its losses by mid-morning, trading largely flat at 7392.30 as of 11:25 am AEDT.

BHP, the largest stock on the S&P/ASX 200, declined as the iron ore price tumbled overnight.
BHP, the largest stock on the S&P/ASX 200, declined as the iron ore price tumbled overnight.Credit:Krystle Wright

The iron ore price tumbled 1.75 per cent amid news that China would be tightening oversight over iron ore prices, weighing on mining heavyweights such as BHP, which fell 1.5 per cent, and Fortescue Metals Group, which shed 2.4 per cent. Coal miners Whitehaven Coal, New Hope Corporation and Yancoal also declined, losing 4.5 per cent, 3.7 per cent and 3.4 per cent, respectively.

Healthcare remained in the green, gaining 1.3 per cent, led by medical equipment company Resmed which added 2.9 per cent.

Consumer electronics retailer JB Hi-Fi led the gains for retailers, adding 3.4 per cent on the back of record half-year earnings and sales.

The MSCI ACWI Index, a gauge of global equities, stalled after its best start to a year in a generation as investors assessed whether the rally has gone too far given the outlook for inflation, growth and earnings.

Meanwhile, US spot markets were closed for a holiday but futures on the S&P 500 and Nasdaq 100 indexes fell at least 0.2 per cent each, the yield on 10-year Treasuries was little changed at 3.50 per cent, and the US dollar snapped a three-day losing streak. European stocks were boosted by gains in real estate companies.

While inflation in the US appears to have peaked, aggressive policy tightening by the Federal Reserve and other central banks risks pushing the global economy into a recession that could hurt corporate profits. The World Bank last week added to the gloomy outlook, warning of “one of the sharpest slowdowns we have seen in the past five decades.”

“It’s been quite a frantic start to the year, so investors may be capitalising on the opportunity to catch their breath,” Craig Erlam, a senior market analyst at Oanda Europe, wrote in a note. “The question now is whether earnings season will enhance that new sense of hope or spoil the party before it really gets going. A bad earnings season could undermine hopes of a soft landing that looks more possible now than it has for many months.”


Earnings will be a key catalyst on Wall Street this week as traders assess whether companies were able to navigate headwinds including higher interest rates. The busy period will also be punctuated by corporate earnings, including Wall Street heavyweights Goldman Sachs and Morgan Stanley.

Several Fed officials will be speaking this week, providing more clues on their policy priorities. The World Economic Forum’s annual meeting kicks off in Davos, Switzerland, with speakers there including European Central Bank President Christine Lagarde and the International Monetary Fund’s Kristalina Georgieva.

Meanwhile, Japanese markets continued to be driven by speculation of a shift in monetary policy, with the Topix index trading lower as the yen’s rebound weighed on exporters.

Investors are on guard for another surprise from the Bank of Japan when it sets policy on Wednesday. The yen strengthened to levels last seen in May and Japan’s benchmark 10-year bond yield pushed above the top of the BOJ’s ceiling for a second day.

Bitcoin fluctuated between gains and losses Monday, following a rebound over the weekend, when it surged amid optimism that it may have bottomed.

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