ASX lower; CSL slumps on trial results

By Millie Muroi
Updated

Healthcare and energy companies dragged the Australian sharemarket lower on Monday despite a positive lead from Wall Street which touched a record over the weekend.

The S&P/ASX 200 fell 18.5 points, or 0.2 per cent, to 7626.3 at about 12.50pm AEDT, even as eight out of eleven sectors flashed green.

Wall Street’s benchmark index closed over 5000 for the first time.
Wall Street’s benchmark index closed over 5000 for the first time.Credit: Reuters

Healthcare giant CSL led the decline, dropping 4.7 per cent after it gave up on plans to seek regulatory approval for a proposed drug following weak results in a phase-three trial. Hearing implants maker Cochlear (down 0.4 per cent), Resmed (down 1.3 per cent) and Fisher & Paykel Healthcare (down 2.7 per cent) were also weaker.

Miners (down 0.6 per cent) and energy companies (down 1 per cent) were also among the weakest performers with heavyweight iron ore miner BHP shedding 0.8 per cent, gold miner Newmont losing 1.2 per cent and Woodside dropping 2.1 per cent.

Information technology companies (up 1.1 per cent) were among the strongest on the local bourse with Altium (up 2.6 per cent) and TechnologyOne (up 2.7 per cent) leading gains in the sector.

JB Hi-Fi (up 7 per cent) jumped after it reported sales and revenue figures for the first half which were at the top end of analyst expectations.

More gains for US stocks on sent Wall Street to its latest record, milestone and winning week.

The S&P 500 rose 0.6 per cent and finished a day above the 5000 level for the first time. It’s the 10th record in less than a month for the index, which closed its 14th winning week in the last 15 to continue a romp that began around Halloween.

The Nasdaq composite jumped 1.2 per cent to pull within 0.4 per cent of its own all-time high, which was set in 2021. The Dow Jones was a laggard a day after setting its own latest record. It slipped 54 points, or 0.1 per cent.

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Milestones like the S&P 500 at 5000 don’t carry much weight for a market that’s supposed to move on hard numbers like interest rates, profits and revenue. But they can juice up the animal spirits of a market that can also be prone to emotional moves.

Wall Street’s rally got going with hopes that cooling inflation would get the Federal Reserve to dial down the pressure by cutting interest rates. Lately, such cuts look to be coming later than hoped because reports keep showing a remarkably solid economy. But that strength has in turn raised expectations for profits from companies, supporting stocks.

Big Tech stocks did most of the market’s heavy lifting, as they’ve been doing for more than a year, in part on mania around artificial-intelligence technology. Nvidia, Microsoft and Amazon were the three strongest forces lifting the S&P 500 after each rose by at least 1.6 per cent.

Expedia tumbled 17.8 per cent despite also reporting stronger profit than expected. The company gave forecasts for the first three months of 2024 that analysts said pointed to slower growth in bookings. The company also announced a new CEO, Ariane Gorin, will take over in May.

All told, the S&P 500 rose 28.70 points to 5,026.61. The Dow slipped 54.64 to 38,671.69, and the Nasdaq gained 196.95 to 15,990.66.

Profits have largely been coming in better than expected for the big companies in the S&P 500 this reporting season, which is roughly two-thirds finished. That’s usually the case, but even more companies than usual are doing so this time around, according to FactSet.

That has helped optimism rise on Wall Street, but contrarians say it may have gone too far and carried stocks to too-expensive heights.

Traders are flowing into some riskier investments at a quick enough pace that a contrarian measure kept by Bank of America is leaning more toward “sell” now than “buy,” though it’s not at convincing levels. The measure tracks how much fear and greed are in the market, and it suggested buying in October when fear was at a convincing high.

In the bond market, Treasury yields inched higher. The yield on the 10-year Treasury rose to 4.16 per cent from 4.15 per cent late Thursday.

But the movements were much calmer than earlier in the month, when the 10-year yield leaped up from 3.85 per cent as traders forcefully pushed out their forecasts for rate cuts.

In stock markets abroad, indexes were mostly modestly lower. In Asia, several markets were shut for the Lunar New Year holiday.

With AP

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Source: Thanks smh.com