ASX dips despite energy rally after Wall Street scuffles; $A slumps

By Millie Muroi

The Australian sharemarket dropped on Wednesday, dragged down by healthcare and information technology companies, after a weaker day on Wall Street overnight.

The S&P/ASX 200 was down 16.8 points, or 0.2 per cent, to 7297.5 at about 10.35am AEST as all sectors except energy and financials traded in the red.

The ASX is lower on Wednesday.
The ASX is lower on Wednesday.Credit: Louie Douvis

The Australian dollar fell sharply. It was fetching 63.71 US cents at 10.48am AEST.

Coal miners Whitehaven and Yancoal added 2.8 per cent and 2 per cent each, reversing the latter’s losses on Tuesday and bolstering the energy sector (up 1.6 per cent). Heavyweights Santos (up 2 per cent) and Woodside (up 1.5 per cent) also helped to shift the dial upwards for the sector following a 1 per cent increase in Brent crude oil prices overnight.

Industrials companies Infratil (up 1.5 per cent), Qantas (up 1.2 per cent) and Auckland International Airport (up 0.7 per cent) were also among the biggest large-cap advancers in early trade.

CBA (up 0.8 per cent) advanced, helping to lift the financials sector which gained 0.2 per cent. NAB (up 0.2 per cent) and ANZ (up 0.2 per cent) also edged up, while Macquarie lost 1.6 per cent after noting investment-related income from its green energy investments was substantially down in its most recent quarter.

Healthcare companies (down 0.9 per cent) weighed the local bourse as Sonic (down 3.1 per cent), Fisher and Paykel Healthcare (down 1.5 per cent) and Resmed (down 2.9 per cent) declined after UBS downgraded the latter because of an increase in competition for weight loss drugs like Ozempic.

Information technology companies (down 0.8 per cent) were also among the weakest on the index as WiseTech (down 1 per cent), Xero (down 0.8 per cent) and Altium (down 2 per cent) dropped.


Elsewhere, major stock indexes on Wall Street closed lower, giving back some of their recent gains as traders returned from a long holiday weekend.

The S&P 500 fell 0.4 per cent, while the Nasdaq composite slipped 0.1 per cent. Both indexes were coming off their second weekly gain. The Dow Jones lost 0.6 per cent.

The selling was widespread, with decliners outnumbering advancers by more than 3 to 1 on the New York Stock Exchange.

Wall Street has kicked off the week with a middling session.
Wall Street has kicked off the week with a middling session.Credit: Reuters

Losses in industrial, health care and financial stocks were the biggest drag on the benchmark S&P 500. Cintas fell 1.7 per cent, Merck & Co. dropped 2.1 per cent and JPMorgan Chase closed 1.1 per cent lower.

Technology stocks were the biggest bright spot. Microsoft rose 1.5 per cent.

Smaller company stocks also lost ground, sending the Russell 2000 index 2.1 per cent lower.

The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 4.27 per cent from 4.18 per cent late Friday. The yield on the 2-year Treasury, which tracks expectations for the Fed, rose to 4.96 per cent from 4.88 per cent.

Coming off the Labor Day holiday, investors have few economic reports to look forward to this week, while the latest round of corporate earnings is essentially finished.

“There’s not much going on other than investors doing the mental arithmetic over whether the Federal Reserve will or will not continue to hike interest rates,” said Sam Stovall, chief investment strategist at CFRA.

Last week, investors were busy reviewing a heavy load of economic data as they try to get a better picture of the economy. Much of the information fuelled hopes that the Fed might moderate interest rate increases to fight inflation, which has been easing for months.

Wall Street expects the Fed to hold its benchmark interest rate steady at its next meeting later in September, just as it did at its previous meeting. Investors are mostly betting that the central bank will maintain that pause through the rest of the year.

The central bank has raised its main interest rate aggressively since 2022 to the highest level since 2001. The goal has been to rein inflation back to the Fed’s target of 2 per cent. Several measures of inflation have gotten closer to that target and the economy is still growing. That has alleviated concerns about the aggressive rate hikes pushing the economy into a recession.

Analysts are still concerned about the potential for a recession, but those concerns have lessened as inflation cools and the economy remains resilient.

Markets in Europe and Asia closed mixed. Hong Kong’s benchmark fell 2.1 per cent, as investors sold real estate shares which have gained recently following government efforts to support the ailing industry.

With AP

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