ASX slips further as China concerns linger

By Jessica Yun

The Australian sharemarket has retreated on Tuesday despite a positive lead from Wall Street, with China’s weak economic growth figures from Monday still weighing on the local bourse.

The S&P/ASX200 was down 0.5 per cent or 33.7 points to 7,264.8 at midday, with nearly every single sector in the red bar financials and utilities stocks.

Wall Street is higher to start the week.
Wall Street is higher to start the week.Credit: Reuters

Leading the losses are Syrah Resources, Ansell and IGO, which have slipped , 14.8 per cent and 4.5 per cent respectively. On the other side, NRW Holdings has lifted 4.1 per cent, Afterpay owner Block has gained 3.4 per cent, and Virgin Money is up 3.1 per cent.

The big miners are also dragging on the index, with Rio Tinto down 1.2 per cent and BHP sliding 1.5 per cent.

Shares in personal protective equipment maker Ansell are down more than 14 per cent after the company revealed it would slow manufacturing for the next year as part of a $50 million cost-saving initiative in the face of economic headwinds.

The company says it expects earnings per share to come in at between 117 US cents and 118 US cents, below the 125.2 US cents it recorded last year.

Supermarket giant Woolworths has promised to freshen up its New Zealand stores, revealing plans to invest more than $NZ400 million ($371 million) over the next three years. The investment will include the launch the Everyday Rewards program across the ditch in 2024, as well as renewing shopfronts across NZ and rebranding the ‘Countdown’ supermarkets brand to ‘Woolworths Supermarkets New Zealand’ from next year.

Woolies’ New Zealand food business generated $1.9 billion in sales in the third quarter of the 2023 financial year.

Investors don’t seem cheered by the news, however, with Woolworths’ share price slipping 1.5 per cent.


Overnight, Wall Street pushed higher ahead of a week full of updates about where profits for big US companies are heading.

The S&P 500 added 0.4 per cent to its highest closing level in 15 months. The Dow Jones gained 0.2 per cent and the Nasdaq composite climbed by 0.9 per cent.

Stocks elsewhere around the world slipped after China reported weaker economic growth for the spring than economists expected. Its recovery following the removal of anti-COVID restrictions has fallen short of forecasts. While that’s helped to limit inflation globally, it’s also diluted a main engine of growth for the world’s economy.

The weak data from the world’s second-largest economy helped drag crude prices lower. Benchmark US oil dropped $US1.27 to $US74.15 per barrel. Brent crude, the international standard, lost $US1.37 to $US78.50 per barrel. The hope among investors is that the disappointing figures will push Chinese authorities to approve more stimulus for their economy.

In the United States, the economy has remained resilient even though an expected boost from a Chinese recovery hasn’t materialised. It’s managed to avoid a long-predicted recession despite much higher interest rates meant to push down high inflation.

A survey showed Monday that manufacturing in New York state unexpectedly grew, beating economists’ expectations for a contraction. Manufacturing has been one of the US economy’s worse performing areas.

This upcoming week will offer more details on how the economy has affected companies as corporate earnings season ramps up. Nearly 60 companies in the S&P 500 are scheduled to report this upcoming week how much profit they made from April through June.

Also coming up this week will be the latest monthly update on sales at US retailers. Strong spending by US consumers has been one of the main reasons for the economy’s resilience, driven by a remarkably sturdy job market.

Such data dovetailed with inflation that’s been on the decline have helped the S&P 500 soar nearly 18 per cent so far this year. The hope among investors is that all of it together will push the Federal Reserve to soon put a halt to its blistering campaign to raise interest rates.

To be sure, the stock market’s big run also has critics warning it’s gotten too sure of itself. It’s still not a certainty yet that the economy will avoid a recession, that inflation will continue to coast lower and that corporate profit growth will indeed recover.

The wide expectation is for the Fed to raise rates at its meeting next week, which would take the federal funds rate to its highest level since 2001. But the hope among traders nevertheless is that will be the final hike of this cycle.

In markets abroad, stocks in Shanghai slipped 0.9 per cent following the weak Chinese economic data, and South Korea’s Kospi slipped 0.4 per cent. Markets in Japan were closed for a holiday and Hong Kong’s market was shuttered due to a typhoon.

With AP

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