Consumer staples, healthcare weigh on ASX
By Millie Muroi
The Australian sharemarket started the week on the back foot as consumer staples and healthcare companies weighed the index following a negative lead from Wall Street.
The S&P/ASX 200 was down 12.9 points, or 0.2 per cent, to 7135.2 at about 12.10pm AEST, even as energy and consumer discretionary companies rallied.
JB Hi-Fi (up 2.4 per cent) was among the biggest large-cap advancers, extending gains from last week when it surprised with better than expected sales and earnings results. The consumer discretionary sector more broadly added 1.4 per cent, bolstered by Wesfarmers (up 1.3 per cent), IDP Education (up 1.3 per cent) and Aristocrat Leisure (up 0.8 per cent).
Energy companies (up 0.6 per cent) were also stronger as Ampol gained 2.8 per cent despite its net operating profit sliding to $329.6 million in the six months to June, compared to $444.7 million during the same period last year. Heavyweights Woodside (up 0.2 per cent) and Santos (up 0.5 per cent) also edged higher.
BlueScope Steel (up 3.2 per cent) was the biggest large-cap advancer despite reporting a 64 per cent drop in net profit to $1 billion for the year ending June. The company also announced it would spend $1.15 billion to upgrade a blast furnace at its Port Kembla steelworks as a step towards decarbonising the steelmaking process.
Consumer staples (down 0.8 per cent) was the weakest sector on the local bourse as Dan Murphy’s operator Endeavour Group (down 2 per cent) and Treasury Wine Estates (down 1 per cent) dropped.
Healthcare companies (down 0.7 per cent) also slipped as CSL shed 1.2 per cent, along with Resmed (down 0.4 per cent), Sonic Healthcare (down 0.8 per cent) and EBOS Group (down 1.4 per cent).
Lithium miners Liontown (up 3.5 per cent) and Allkem (up 2.8 per cent) bucked the trend among miners which dropped 0.5 per cent as BHP slipped 0.7 per cent and Rio Tinto dropped 1.5 per cent.
Westpac shed 2.8 per cent after releasing a trading update which said the bank’s core net interest margin – which compares funding costs with what the bank charges for loans – saw a 4 basis point decline, and that expenses had increased.
Meanwhile, Wall Street limped to the finish line of its third losing week in a row.
The S&P 500 barely budged as it ended the week with a loss of more than 2 per cent, like other US indexes. It edged down less than 0.1 per cent. The Dow Jones added 0.1 per cent and the Nasdaq composite slipped 0.2 per cent.
August has been rough for the stock market, which has given back more than a quarter of the S&P 500’s torrid gains for the year’s first seven months. That’s in part because a swift rise in yields has forced investors to reconsider whether stocks got too expensive, particularly after critics warned the market rose too far, too quickly.
Stocks held a bit steadier after yields eased a bit. After topping 4.30 per cent a day before and nearing its highest level since 2007, the 10-year Treasury yield fell back to 4.24 per cent.
Stock markets elsewhere in the world sank more sharply, as higher yields globally crank up the pressure. Higher yields mean bonds are paying out more in interest, but they also make investors less willing to pay high prices for stocks and other investments that are less stable than bonds.
The narrative in the stock market may be poised to flip from “buy the dip” during the first half of the year, when traders saw moments of weakness as opportunities to buy low, to “sell the rip” in the second half of the year, according to Bank of America investment strategist Michael Hartnett.
Yields are on the march in part because a string of data has shown the US economy remains resilient. While that suggests the economy may avoid a long-predicted recession, it also raises expectations for the Federal Reserve to keep its main interest rate higher for longer.
The next big event for markets could be Fed Chair Jerome Powell’s speech late next week at an event at Jackson Hole, Wyoming.
Worries have been high about China, whose economic recovery since removing anti-COVID restrictions has faltered. Property developers in the world’s second-largest economy are under particularly heavy scrutiny.
Evergrande Group, a giant real-estate developer, is asking a US court to approve a restructuring plan for foreign bondholders as it tries to avoid defaulting on $US340 billion ($531 billion) in debt.
With AP
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Source: Thanks smh.com