ASX treads water as energy, consumer stocks weigh

By Millie Muroi

Weaker energy and consumer staples companies dragged on the Australian sharemarket at the open despite investors receiving a modest positive lead from Wall Street overnight.

The S&P/ASX 200 was down 1.2 points, or 0.01 per cent, to 7296.5 about 12pm AEST even as communications services, financials and utilities companies traded in the green.

Wall Street traded higher on Wednesday.
Wall Street traded higher on Wednesday. Credit: AP

Diversified miner IGO (up 3.9 per cent) was the biggest large-cap advancer after the company posted positive results in its latest full-year report and declared a special dividend, followed by Boral (up 2.3 per cent) which reversed losses from earlier this week and James Hardie Industries (up 1.7 per cent).

Communications services (up 1.1 per cent) and information technology (up 0.9 per cent) were the strongest sectors on the local bourse as TPG stepped up 1.6 per cent, Xero added 1.6 per cent and gained 1.5 per cent. Financials (up 0.7 per cent) were also stronger as all four big banks traded higher.

Energy companies (down 2.9 per cent) were among the weakest on the index as shares in coal miner Whitehaven (down 9.1 per cent) dived, and heavyweight Woodside shed 4 per cent.

Consumer staples (down 1.3 per cent) were also weaker with supermarket giant Woolworths dropping 1.9 per cent.

Overnight, US stocks ended modestly higher, extending Wall Street’s recent winning streak to its fourth day in a row and chipping away more of the market’s losses this month.

After a choppy day of trading, the S&P 500 closed 0.4 per cent higher. The benchmark index remains down 1.6 per cent for August, with one trading day left in the month. The Dow Jones edged up 0.1 per cent, while the Nasdaq composite added 0.5 per cent.

Technology stocks led the market’s gains. Apple rose 1.9 per cent and Palo Alto Networks rose 1.7 per cent. HP was on the losing end with a 6.6 per cent slump after cutting its profit forecast for the year.


Wall Street’s focus this week remains a broad mix of data that investors hope will paint a clearer picture of where the economy is headed and whether the Federal Reserve has enough reason to hold off on further interest rate hikes.

A survey of private-sector employers in the US showed that hiring cooled more than expected by economists. The report reinforces the latest government data on job openings from Tuesday, which also showed that hiring is cooling somewhat.

The US downgraded its economic growth estimate for the second quarter to an annual rate of 2.1 per cent from 2.4 per cent. Economists had forecast that the gross domestic product, or GDP, assessment would remain unchanged though it still marks a slight increase from growth of 2 per cent during the first quarter.

Treasury yields fell following the latest economic reports. The yield on the 10-year Treasury slipped to 4.11 per cent from about 4.15 per cent just before the latest GDP report. It stood at 4.12 per cent late on Tuesday.

The yield on the 2-year Treasury, which tracks expectations for the Fed, fell to 4.88 per cent from 4.90 per cent prior to the latest GDP release. It stood at 4.89 per cent late on Tuesday.

Wall Street is also hoping that economic data this week shows that the Fed’s goal of a “soft landing” is possible. The central bank’s goal has been to raise interest rates enough to tame inflation without crashing the economy into a recession. A strong job market and consumer spending has helped thwart a recession and analysts are divided on whether one will occur with any severity.

On Thursday, the US government will release its latest update on inflation with the July report on personal consumption and expenditures, or PCE. That’s the Fed’s preferred measure for inflation, and it has been cooling for months. PCE eased to 3 per cent in June and was as high as 7 per cent a year ago.

On Friday, the government’s monthly employment report for August will cap a heavy week of updates about hiring and jobs.

Market jitters over the possibility that interest rates end up staying higher for longer led to a pullback for stocks this month following what had been a banner year. Even so, the S&P 500, which soared 19.5 per cent through July, remains about 17.6 per cent higher for the year, while the tech-heavy Nasdaq is up nearly 34 per cent.

European markets mostly fell.

With AP

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