- 01Tech slump and oil surge dragged the ASX down 0.2%.
- 02Materials fell 3.6%; consumer and financials gained.
- 03Zip sank 26.8% after losses and US fraud.
A combination of a tech sell-off on Wall Street and the continuing rise in oil prices conspired to send the Australian share market lower on Friday, down 17.9 points, or 0.2%, to 8775.3 points.
Four of the 11 sectors ended in the red after the technology-heavy Nasdaq Composite index fell 2.9% and the broader S&P 500 fell 1.2%.
The weakness was driven largely by Meta, whose shares fell 7% after it revealed plans to spend about $US825 billion ($1.2 trillion) in the coming years, reigniting doubts about the sustainability of the artificial intelligence infrastructure boom increasingly financed by debt.
In turn that led to a fall in the price of copper which weighed on the big Australian miners on concerns about a slide in demand for one of the key metals used in AI infrastructure.
Bond yields finally fall
If there was a positive in all of this market mayhem, it was the renewed demand for US Treasuries, which was strong enough to push the 10-year yield back below 5% despite the rise in oil prices.
There doesn’t seem to be any sign of weakness in the price of oil, with crude prices hitting a five-month high above $US112 a barrel overnight, after drone strikes by Iran-backed Houthis damaged energy infrastructure in Saudi Arabia.
Naturally, any threat to production from the world’s third-largest oil exporter was bound to have an impact.
Consumer stocks rise
One of the few areas to gain on the ASX was the consumer discretionary sector which rose by almost 1.7%.
Shares in Wesfarmers (ASX: WES) were up 2.6%, JB Hi-Fi (ASX: JBH) rose 1.6% and Harvey Norman (ASX: HVN) was up 1.7%.
It was also a good day for banks and other financials, with the index up 1.5%. Shares in Commonwealth (ASX: CBA) rose 2.8%, National Australia Bank (ASX: NAB) rose 2.5%, Westpac (ASX: WBC) rose 2.3% and ANZ (ASX: ANZ) rose 0.9%.
The falling copper price saw the materials sector fall 3.6% as gold, silver and lithium joined copper on the back of falling prices.
Shares in BHP (ASX: BHP) fell 3.3%, Rio Tinto (ASX: RIO) fell 2.3% and South32 (ASX: S32) fell 5.4%.
Zipping downwards
There were also plenty of share market moves caused by company announcements with shares in Zip (ASX: ZIP) falling 26.8% on the back of rising loss rates and a hit to profit caused by a fraud incident in the US.
Lithium miner Mineral Resources (ASX: MIN) shares fell 3.6% even after it reported record lithium sales in the September quarter.
At the same time shares in Temple & Webster (ASX: TPW) jumped 32.2% after it reported an 8% decline in revenue so far this financial year – perhaps a better result than some were expecting.
Shares in Whitehaven Coal (ASX: WHC) slipped 1.5% after its coal production in the September quarter rose 22% compared with a year earlier.
Apart from general weakness in the price of metals, shares in Rio Tinto (ASX: RIO) fell 2.3% after the miner revealed it will spend $1.9 billion developing a bauxite project in Queensland.
Shares in hotel, resort and cinema company EVT (ASX: EVT) rose 1.7% after a 17% rise in September quarter earnings despite very disappointing snow conditions for its Thredbo ski resort.
The week ahead
Once again, inflation will be the number one topic for markets in the coming week with Australia’s quarterly consumer price index figures out on Wednesday set to be closely watched.
Those numbers have taken on added significance after recent hawkish comments from RBA Deputy Governor Andrew Hauser which highlighted concerns around persistent inflation pressures.
While market expectations of a 25-basis-point hike in interest rates on Melbourne Cup day have been rising, the actual inflation data will certainly play a part in the RBA board’s considerations.
US Fed contemplating another rise
Feeding into the inflation and interest rate story will be a meeting of the US Federal Reserve in the coming week.
While the market expects US official rates to remain steady after the meeting, there is certainly a lot of interest in any comments by Fed chair Kevin Warsh about the timing and likelihood of any further official interest rate hikes.
Investors will also be watching changes in the Core PCE price index, the Fed’s preferred measure of inflation.
We are also set for a bumper week of US earnings results, with reports due from companies including Verizon, Visa, Coca-Cola, Boeing, Hilton Worldwide Holdings, UPS, Freeport-McMoRan, S&P Global, Alphabet, Microsoft, KLA Corp, T-Mobile, Amazon, Eli Lilly, Mastercard, Intel, Shell, Caterpillar, SanDisk, Exxon Mobil and Chevron to name a few.
Annual meetings could move shares
There are also a series of annual shareholder meetings, where companies may provide trading updates that could move their shares with some of the companies including Cochlear, Nick Scali, CSL, Data#3, Vicinity Centres, Fortescue, Dexus, Woolworths, Challenger, Perpetual, JB Hi-Fi, Super Retail, Wesfarmers, Pinnacle Investment, Endeavour Group, Tabcorp, Reece and CAR Group.
There is also a string of quarterly updates to watch including Perseus Mining, Elevra Lithium, Stanmore Resources, Sandfire Resources, Pilbara Minerals, Boss Energy, Woolworths, Iluka Resources, Vulcan Energy, Lynas Rare Earths, IGO, Suncorp Group, ResMed, Origin Energy and Coles Group.
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The ASX small-cap stories that matter, filed before 9am AEST. Curated by the Small Caps desk.