The share market fell more than 1.2 per cent to a fresh seven-week low as plunging US equity futures added to investor worries.
The S&P/ASX 200 declined 89 points or 1.23 per cent by mid-session. The index dipped below 7100 for the first time since mid-March before paring its fall to 7117.
US futures swooned in “risk off” Sunday night action, dousing hopes of a swift recovery from last week’s losses.
Ten of eleven ASX sectors declined, led by tech and property stocks. Healthcare companies clung to slender gains.
What’s driving the market
A new week brought no respite from the selling that has dragged the ASX lower for three weeks and fuelled Wall Street’s longest run of weekly declines in more than a decade.
The S&P 500 fell 0.57 per cent on Friday to a fifth straight losing week. The Nasdaq sank 1.4 per cent to a two-year closing low. The Dow dropped 0.3 per cent, sealing a sixth weekly loss.
Falling US futures this morning underlined the sour mood. S&P 500 futures dived 52 points or 1.26 per cent. Dow and Nasdaq futures declined by at least 1.1 per cent.
NAB’s daily update this morning was headlined “Are markets running scared?” The report quoted a Wall Street Journal article that said bets on the market falling had reached a decade high.
The only ASX sector to resist today’s downtrend was healthcare. Energy and consumer staples were next best with falls of less than 0.1 per cent.
“Safe-haven and energy security will increasingly be sentiments of flavour among traders and investors. These themes have yet to hit Wall Street types in full, and so such notions, the right ones of course, are far from being even partially, let alone fully priced in financial markets,” Clifford Bennett, chief economist at ACY Securities, said.
The speculative end of the market – a barometer of risk appetite – came under particular pressure. The S&P/ASX Emerging Companies Index skidded 3.35 per cent to an eight-month low. The Small Ords fell 2.8 per cent to a level last seen in February 2021.
The dollar continued to wilt in the face of a risk-off retreat to the perceived safety of the US dollar. The Aussie was lately down 0.38 per cent at 70.17 US cents.
Going up
Westpac was the pick of the heavyweights, rising 2.69 per cent as investors cheered an increased dividend and a sharp reduction in costs. The bank’s first-half net profit of $3.28 billion was up 63 per cent on the previous six months, but down 5 per cent on the same period last financial year.
Decreased costs and a reduction in bad debts allowed the bank to hike its interim dividend to 61 cents per share despite contracting margins.
“I’m pleased with our progress on costs which are down 27%, or 10% excluding notable items, compared to the second half of 2021. This includes a reduction in headcount of more than 4000 as we track towards our target of an $8 billion cost base by FY24,” CEO Peter King said .
Other advances included havens CSL +1.47 per cent, Woolworths +0.63 per cent and Coles +0.21 per cent. Domino’s Pizza rallied 3.48 per cent. Ramsay Health Care bounced 0.58 per cent.
Going down
Rate-sensitive growth stocks were once again the market’s whipping boys, continuing this year’s pattern. Novonix shed 7.78 per cent, City Chic Collective 8.24 per cent and PointsBet 7.75 per cent.
Magellan announced it was selling its 11.6 per cent stake in Mexican fast food firm Guzman y Guzman for $140 million to refocus on its core funds management business. Shares in the firm dropped 7.48 per cent.
Troubled gaming group Star Entertainment shed 2.3 per cent on news it was suspending its rebate programs while it fixes issues raised during a NSW inquiry.
Aged care provider Estia Health eased 3.52 per cent after warning of a delay in recovering Covid costs. The company has applied for government grants to recoup additional costs imposed by Covid regulations, but slow processing times meant a “significant portion” would not be approved before June 30.
News Corp fell 9.7 per cent to a 16-month low in the wake of Friday’s poorly-received trading update.
A sharp end-of-week decline in bulk metals weighed on the major miners. Fortescue Metals shed 5.52 per cent, Rio Tinto 2.67 per cent and BHP 1.13 per cent.
The real estate investment trust sector slumped 3.5 per cent to an 11-month low amid speculation about the impact of higher rates. Goodman Group gave up 5.51 per cent, Centuria Capital 4.32 per cent and Growthpoint Property 4.02 per cent.
ANZ fell 3.18 per cent as its shares traded ex-dividend.
Other markets
A tough morning on Asian markets saw the Asia Dow lose 1.22 per cent, Japan’s Nikkei 2.31 per cent and China’s Shanghai Composite 0.07 per cent.
Oil retreated in volatile trade. Brent crude was lately down 36 US cents or 0.3 per cent at US$112.03 a barrel after trading below US$111 this morning.
Gold faded US$5.80 or 0.3 per cent to US$1,877 an ounce.