Join our daily newsletter At The Bell to receive exclusive market insights
A broad sell-off dragged the share market down 1.4 per cent, mirroring an end-of-week plunge on Wall Street amid heightened market volatility and pessimism about the global economy.
The S&P/ASX 200 slumped 96 points or 1.42 per cent by mid-session. The decline reversed much of Friday’s 116-point rally.
Mining stocks led a retreat that lowered all 11 sectors. Almost nine out of every ten companies on the index declined. Lithium producers outperformed.
What’s driving the market
A recent run of extreme swings continued with a swift unwinding of Friday’s explosive up-move. The market surrendered those gains after the S&P 500 fell for the seventh time in eight sessions and the Nasdaq Composite dropped to a two-year low.
The S&P 500 shed 2.37 per cent as a survey showed Americans were increasingly worried about rising prices. The US benchmark has fallen for four of the last five weeks amid fears economic growth will fall victim to the Federal Reserve’s determination to crush inflation.
“As inflation remains elevated for longer and the Fed hikes further, the risk increases that the cumulative effect of policy tightening pushes the U.S. economy into recession, undermining the outlook for corporate earnings,” Mark Haefele, CIO at UBS Global Wealth Management, said.
A global bond market sell-off accelerated last week as traders raised their rates expectations. The ten-year US yield climbed above 4 per cent. This morning, the Australian ten-year yield climbed four basis points to 4.06 per cent.
The on-going effect of the La Nina weather pattern prompted earnings warnings this morning from companies as diverse as fruit and veg grower Costa Group and building materials manufacturer Adbri. Insurer Suncorp said it received around 1,000 claims following flooding and heavy rains in Victoria in recent days.
Going up
Lithium miners provided most of the morning’s best returns after the price of the metal hit a fresh high in China. Liontown Resources jumped 5.81 per cent. Sayona Mining firmed 1.14 per cent, Lake Resources 1.54 per cent and Pilbara Minerals 1.6 per cent.
Core Lithium firmed 3.03 per cent after Managing Director Stephen Biggins accelerated his departure. Biggins has resigned with immediate effect after previously announcing he would step down before year-end. Gareth Manderson has been appointed CEO.
A rebound in the hotel and retail drinks trade lifted shares in Endeavour Group 1.75 per cent. First-quarter sales increased 4.5 per cent as Australians embraced live gigs, dining out and online ordering. Retail sales were 13.9 per cent stronger than before Covid.
IAG rallied 1.25 per cent on news the insurer will buy back up to $350 million shares on-market.
Going down
Construction materials producer Adbri plunged 19.02 per cent to a 13-year low as a soft trading outlook was compounded by the departure of CEO and Managing Director Nick Miller. Mark Irwin will step up as interim CEO after the board “determined that it is an appropriate time for a change in leadership”.
The company expects a full-year underlying net profit after tax of $75-$85 million as extreme rainfall and inflation impact margins.
Costa Group dived 11.26 per cent to a six-year low after warning adverse weather will dent citrus production. Full-year earnings for the sector were expected to be “considerably lower than previously forecast”.
Medibank skidded 4.55 per cent as trade resumed following news last week of a cyber attack. The private health insurer said there was no evidence customer data had been stolen. Normal activity resumed on Friday. The company reaffirmed its FY23 outlook.
CSL eased 1.54 per cent after forecasting full-year net profit growth of 13-18 per cent following the acquisition of Swiss giant Vifor. The acquisition is expected to contribute $300-$330 million in profit.
Bega Cheese slid 2.01 per cent on news its Hong Kong-based joint-venture partner intends to exercise its right to buy out Bega’s stake in Vitasoy Australia. The sale would strip Bega of its toehold in the plant-based beverages space.
APA dipped 0.68 per cent after offering to acquire Basslink for $773 million. Basslink Ltd, which operates the electricity cable linking Victoria and Tasmania, is currently in voluntary administration. The transaction would have to be approved by creditors.
Insurer Suncorp slipped 2.23 per cent after receiving around a thousand claims relating to widespread rain and flooding in and around Victoria in recent days. Claims were expected to increase.
The sudden death on the weekend of CEO and Managing Director Peter Bradford knocked shares in nickel miner IGO down 3.07 per cent. Chief Operating Officer Matt Dusci will act as CEO.
Metcash shed 0.78 per cent despite a 7.7 per cent lift in group sales year-to-date. The IGA operator said it saw “strong sales momentum”, including a 17.1 per cent increase in hardware sales and a 12 per cent jump in liquor.
Iron ore hopeful Hawsons Iron lost more than half its value after a deteriorating economy prompted a delay in developing its flagship project. The board decided to slow work on a bankable feasibility study (BFS) to examine escalating capital expenditure costs and consider options for the project.
“We have been left with no other choice given the current state of global capital markets and world economy,” Managing Director Mr Bryan Granzien said.
The share price fell as low as 12 cents before paring its loss to 62.16 per cent at 14 cents.
Other markets
Asian markets logged solid losses. The Asia Dow fell 1.09 per cent, China’s Shanghai Composite 0.37 per cent, Hong Kong’s Hang Seng 0.65 per cent and Japan’s Nikkei 1.31 per cent.
US futures recovered in Sunday night action. S&P 500 futures climbed 16.5 points or 0.46 per cent.
Oil recouped a portion of last week’s 6.4 per cent decline. Brent crude rebounded 82 US cents or 0.9 per cent to US$92.45 a barrel.
Gold rallied US$5.50 or 0.3 per cent to US$1,654.40 an ounce.
The dollar bounced 0.07 per cent to 62.26 US cents.
