ASX opens lower as Wall Street scuffles
By Millie Muroi
The Australian sharemarket continued to see red on Friday as company figures weighed on investor sentiment, after stocks drifted lower on Wall Street on the back of a mixed batch of earnings reports.
The S&P/ASX 200 was down 28.9 points, or 0.4 per cent, to 7,461.4 at the open, as all sectors, except consumer staples and materials lost ground.
Information technology (down 1.3 per cent), utilities (down 1.2 per cent) and energy (down 1.1 per cent) were the biggest weights on the index. Coal majors New Hope Corporation, Yancoal and Whitehaven lost 8.3 per cent, 6.9 per cent and 5.7 per cent each, despite the first shipment of the commodity in two years docking in China on Thursday.
Property services group REA shed 3 per cent after it reported a 9 per cent fall in national residential new listings in January as interest rates continued to depress consumer sentiment and property prices.
Consumer staples (up 0.1 per cent) lifted the index, and materials which traded flat, as heavyweight BHP gained 0.7 per cent on the back of a 1.6 per cent increase in iron ore prices.
In the US, stocks have been shaky this week, flipping between gains and losses amid uncertainty about where interest rates and inflation are heading
The S&P 500 was 0.9 per cent lower at the close, while the Dow Jones Industrial Average shed 0.7 per cent. The Nasdaq lost 1 per cent.
A still-strong jobs market has investors buying more into the Fed’s forecast that it will hike rates a couple more times before holding them at a high level through this year. High rates can drive down inflation but also raise the risk of a recession and hurt investment prices.
A narrowing disconnect between markets and the Fed could lead to less volatility in markets in the future, said Thomas Martin, senior portfolio manager at Globalt Investments. But for now, with a jumble of earnings reports pouring in from companies and questions remaining about whether the economy can avoid a sharp recession, swings are likely to remain.
“There’s continuing evidence that the economy is stronger than people thought it was going to be,” Martin said. “The question is what is the economy’s ability to continue that resilience in the face of interest rates that are a lot higher than they were a year ago.”
In the bond market, at least, a warning signal is continuing to flash red with yields on longer-term Treasuries well below shorter-term Treasuries. It’s an unusual occurrence that has often preceded recessions in the past.
High inflation and worries about a slowing economy have already begun to hit corporate earnings.
Baxter International dropped 12 per cent after the health care company reported weaker quarterly profit than forecast. It also gave a forecast for earnings this upcoming year that fell below Wall Street’s expectations. Baxter also announced layoffs to cut costs, saying it would reduce its global workforce by less than 5 per cent.
Mattel tumbled 10 per cent after the toymaker reported a big decline in sales and weaker profit than expected for the all-important holiday quarter.
On the winning end, shares in Disney climbed 2 per cent after the company reported stronger profit for the latest quarter than analysts expected. It also said it will cut about 7,000 jobs as part of a plan to reduce its costs by $US5.5 billion ($7.9 billion).
The media giant joins the growing list of high-profile companies to announce layoffs amid an uncertain economy. The bulk began in the technology industry, where companies acknowledged misreading the boom coming out of the pandemic and hiring too many people. But job cuts have since spread out to other industries.
Overall, though, the job market has remained resilient. Last week, 196,000 US workers filed for unemployment benefits. That was slightly more than the prior week, but it remained below the 200,000 level for a fourth-straight week.
With AP
Most Viewed in Business
Source: Thanks smh.com