BHP falls as ASX opens lower

By Najma Sambul
Updated

The Australian sharemarket has opened lower with mining giant BHP among the early losers after it posted a sharp fall in half-year profit and announced a sharp cut to its dividend.

The S&P/ASX200 dropped 45.60 points, or 0.62 per cent, to 7,305.90 at 10:19 am AEDT.

The ASX is set to retreat at the open on Tuesday.
The ASX is set to retreat at the open on Tuesday. Credit:Louie Douvis

Most sectors opened in the red, with Energy, IT, and real estate leading the downturn in morning trade. BHP’s share price dropped 1.63 per cent to $47.67, while Seek and WiseTech Global fell by 2.59 and 1.12 per cent, respectively.

BHP told investors on Tuesday that its underlying profit for the six months to December had fallen by 32 per cent to a weaker-than-expected $US6.5 billion ($9.4 billion) after strict COVID-19 lockdowns in China and concerns about an economic slowdown pummeled the price of iron ore.

Its shareholders will receive an interim dividend of US90¢ a share ($1.30), down from $US1.50 it paid out at the same time last year. The company also confirmed it had launched a process to sell its Daunia and Blackwater metallurgical coal mines that it jointly owns with Mitsubishi in Queensland, as it begins to reposition its portfolio away from fossil fuels.

Miners Rio Tinto and Fortescue were both in the green in morning trade. Fortescue was up 1.73 per cent.

All of the big banks opened in the red on Tuesday, ANZ led the losses with a 0.73 per cent decline.

Meanwhile, supermarket chain Coles’ revenues rose 3.9 per cent to $20.8 billion for the first half of the 2023 financial year, and profits jumped 11.6 per cent to $616 million. The supermarket chain also announced that chief Steven Cain was stepping down in May after five years in the job with Leah Weckert to take over the role

The group’s supermarkets business saw revenues up 4.6 per cent to $18.8 billion, though sales in its liquor business were down by 2.4 per cent to $1.9 billion compared with the previous half, which was heavily affected by shoppers staying at home because of the pandemic. Its share price was up slightly at 0.44 per cent on Tuesday morning.

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US equity-index futures fell as concern the Federal Reserve will keep borrowing costs higher for longer outweighed optimism over China’s economic recovery.

Contracts on the S&P 500 Index slipped 0.3 per cent as trading was muted with Wall Street closed due to the Washington’s Birthday public holiday. The Stoxx Europe 600 Index was marginally higher after fluctuating in a tight range throughout the day.

A chorus of investors including Goldman Sachs is betting on Chinese equities to resume a rally as the world’s second-biggest economy deepens stimulus and relaxes pandemic restrictions. While this has sparked inflows into global assets tied to the Chinese economy, the broader sentiment in markets remains impaired, with the Fed resolute on its fight against inflation. Growing geopolitical tensions are also preventing investors from turning more bullish. The Shanghai Composite Index climbed the most since November.

“2023 will be much bumpier than the current performance would suggest,” Luca Fina, head of equities at Generali Insurance Asset Management, wrote in a note. “It would make sense to reduce the cyclicality of portfolios — adding some cheap year-to-date losers that should perform better in a higher-volatility and uncertainty scenario (and) by reducing those who are currently more expensive and pricing a Goldilocks scenario.”

Contracts on the S&P 500 and Nasdaq 100 indexes slipped, with Treasury futures dropping across the curve. Stocks ended last week on a muted note after Richmond Fed President Thomas Barkin and Fed Governor Michelle Bowman both expressed their support for continued rate hikes. That followed hawkish remarks by St. Louis Fed President James Bullard and Cleveland President Loretta.

with Bloomberg

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Source: Thanks smh.com