ASX slides lower; Woolworths dives, miners fall
By Millie Muroi
The Australian sharemarket retreated on Wednesday, pulled down by consumer staples companies, miners and energy firms following a negative lead from Wall Street where tech stocks led the decline.
The S&P/ASX 200 fell 33.7 points, or 0.4 per cent, to 7625.3 at about 10.45am AEDT as six out of the eleven sectors traded in the red.
Australia’s largest employer, Woolworths (down 6.2 per cent), plunged after the company’s chief executive, Brad Banducci, stepped down in a shock announcement following eight years in the role. The broader consumer staples sector (down 3.6 per cent) was weaker with competitor Coles dropping 2.2 per cent and Endeavour Group slipping 1.3 per cent.
Iron ore heavyweights Fortescue (down 3.4 per cent) and BHP (down 2.7 per cent) were also among the biggest large-cap decliners, weighing down the mining sector (down 2 per cent). Energy companies (down 1.3 per cent) dropped with Viva Energy Group losing 4.6 per cent, Woodside shedding 0.7 per cent and Santos slipping 1.6 per cent.
Meanwhile, IT stocks (up 2.8 per cent) led gains on the local bourse despite weakness in the technology sector on Wall Street overnight. WiseTech soared 12.5 per cent after the logistics software giant hiked its interim dividend by 17 per cent after declaring it is on track to generate more than $1 billion in revenue this year. Healthcare stocks including Cochlear (up 3.5 per cent) and Fisher & Paykel Healthcare (up 2.6 per cent) were also stronger.
Meanwhile, technology stocks led Wall Street broadly lower as chipmaker Nvidia pulled back ahead of its earnings report this week.
The S&P 500, coming off only its second losing week in the last 16, fell 0.6 per cent. The Nasdaq composite gave up 0.9 per cent and the Dow lost 0.2 per cent. Markets were closed in the US on Monday for Presidents Day.
Technology stocks were among the biggest weights on the market. Nvidia, which has ridden a wave of investor enthusiasm over artificial intelligence, lost 4.4 per cent. The stock has more than tripled over the past year.
Walmart rose 3.2 per cent after reporting stronger-than-expected results for its latest quarter and issuing sales forecasts that came in ahead of what Wall Street was expecting.
Home improvement retailer Home Depot wavered between small gains and losses. It beat Wall Street’s earnings forecasts, but gave investors a disappointing profit forecast for the year.
Outside of earnings, credit card company Capital One Financial rose 0.1 per cent as it moves ahead with a $US35 billion ($53.4 billion) buyout of Discover Financial Services. Discover soared 14 per cent.
Markets are coming off of a heavy week of economic reports that hinted at stubborn inflation squeezing consumer spending. That has pushed expectations for the Federal Reserve to start cutting interest rates further out into 2024. The central bank will release minutes from its latest meeting, potentially giving investors more insight into its next move.
Those lowered expectations for interest rate cuts and renewed worries about inflation have essentially tripped up the broader market.
“The narrative that drove us to these levels is very much being called into question,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
Bond yields fell. The yield on the 10-year Treasury slipped to 4.25 per cent from 4.28 per cent late Friday. The yield on the two-year Treasury fell to 4.58 per cent from 4.65 per cent.
Markets in Europe were mixed and markets in Asia were mostly higher.
China’s central bank kept its 1-year loan prime rate unchanged on Tuesday but cut its 5-year rate by 25 basis points to 3.95 per cent. That came as a surprise, the first time the five-year rate was cut since May 2023.
Investors have a relatively light week of economic updates ahead, with the latest data on home sales expected Thursday. The broader housing market remains tight, with demand still outpacing supplies. Mortgage rates also remain high, though they have been easing from their most recent peak in late October, when the average rate on a 30-year mortgage hit 7.79 per cent.
More than 80 per cent of companies in the S&P 500 have reported their latest results. Analysts polled by FactSet expect overall earnings growth of about 3.3 per cent for the fourth quarter and are forecast earnings growth of about 3.6 per cent for the current quarter.
Wall Street will have to wait until the end of February for another key update on inflation, when the government releases its monthly personal consumption and expenses report, which is the Fed’s preferred measure.
“The key question to answer now is whether inflation is bottoming out, and if it is, does it go sideways or back up,” Samana said.
With AP
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Source: Thanks smh.com