Market Herald logo

Subscribe

Be the first with the news that moves the market

The share market suffered its heaviest loss in two months despite paring early falls as Asian markets steadied on central bank support for the Chinese economy.

The S&P/ASX 200 trimmed an opening loss of 182.5 points to a closing deficit of 155 points or 2.08 per cent.

Mining and energy companies led the retreat after fears of widening Covid lockdowns in China prompted sharp declines on commodity markets. No sectors were spared as the market played catch-up with negative developments across the long weekend.

What moved the market

The Anzac Day holiday was bookended by the market’s worst sessions since February. A 119.5-point tumble on Friday was compounded by another sharp decline today as investors steeled themselves for the possibility of lockdowns extending to Beijing. Chinese authorities commenced city-wide testing on the weekend as infections spread.

Today’s decline tipped the ASX 200 back into the red for 2022. The index ended the session more than 120 points below where it started the year.

A partial rebound on Wall Street did little to reassure investors after the Dow suffered its biggest hit since 2020 on Friday night. Overnight, the Dow bounced 238 points or 0.7 per cent, recouping less than a quarter of Friday’s 981-point loss. The S&P 500 gained 0.57 per cent.

Attention swung to Asia, where most of the major indices were this afternoon in repair mode following a brutal start to the week. Mainland and Hong Kong stocks rebounded after the People’s Bank of China announced plans to support an economy hamstrung by restrictions in Shanghai and the threat of a wider lockdown as the government pursues a zero-Covid policy.

The central bank said it “will step up the prudent monetary policy’s support to the real economy, especially for industries and small businesses hit hard by the pandemic.”

Hong Kong’s Hang Seng bounced 1.16 per cent. An afternoon fade pulled the Shanghai Composite down 0.09 per cent, adding to yesterday’s 5.13 per cent loss. The Asia Dow was flat. Japan’s Nikkei added 0.56 per cent.

Investors largely ignored tepid gains in US futures. S&P 500 futures improved eight points or 0.2 per cent.

Winners’ circle

Just one of the top 200 companies gained more than 2 per cent. UK banking group Virgin Money firmed 2.32 per cent. Next best were Afterpay owner Block, up 1.96 per cent, and agribusiness Nufarm, up 1.92 per cent.

Nufarm inched to a new two-and-a-half-year high after confirming the earnings hit from the Ukraine war will be immaterial. The firm has “nascent operations” in both countries, but said its exposure was limited.

Buyers picked at traditional defensive pockets of the market, including healthcare, consumables and real estate. Ansell gained 0.88 per cent, Endeavour Drinks 1.16 per cent and Inghams 0.98 per cent.

Pushpay jumped 22.92 per cent on takeover interest. The donor management system provider said it had received “unsolicited, non-binding and conditional expressions of interest or approaches from third parties looking to acquire the Company”. Goldman Sachs will advise the company, which also reaffirmed its full-year guidance.

At the speculative end of the market, BMG Resources jumped 19.44 per cent on positive drilling results from the Abercromby gold project.

Market hunger for battery metals saw Lithium Plus soar 180 per cent this afternoon upon listing.

Doghouse

The iron giants and energy producers led the retreat of the market heavyweights. Fortescue Metals fell 6.88 per cent, BHP 5.84 per cent and Santos 4.29 per cent. Rio Tinto lost 4.26 per cent.

Woodside Petroleum slumped 4.58 per cent on news sales revenues fell 17 per cent last quarter on weaker trading activity. The average realised price improved by 3 per cent to $93 per barrel of oil equivalent.

A 15 per cent jump in revenues on improved oil prices helped cushion Beach Energy from news production declined 3 per cent last quarter. Production was affected by rain delays in the Cooper Basin and planned maintenance in the Bass Basin. The share price declined 3.93 per cent.

An earnings downgrade cost payments platform EML more than a third of its market value. The share price tanked 38.56 per cent after the firm lowered its full-year underlying earnings guidance to $52-$55 million from previous guidance of $58-$65 million.

A blowout in costs dragged South32 down 7.85 per cent. The diversified miner updated guidance to reflect negative currency moments, higher raw material costs and higher price-linked royalties. Production guidance was unchanged.

Investors were underwhelmed by guidance from United Malt. The maltster’s shares fell 5.44 per cent on news full-year underlying earnings were expected to be in the range of $115-$140 million. The company faces up to $25 million in costs from severe drought conditions in Canada.

A record quarter cushioned Perseus from the worst of the selling. The gold miner increased production by 2 per cent and reaffirmed half-year guidance. The share price eased 2.59 per cent.

Other markets

The dollar rebounded after falling more than 2.5 cents against the greenback across the holiday weekend as investors dumped “commodity currencies” in favour of the safety of the US dollar.

The Aussie bounced 0.63 per cent this afternoon to 72.22 US cents. The local unit was trading above 74.5 US cents before the long weekend.

Oil and gold also recovered. Brent crude firmed US$1.37 cents or 1.3 per cent to US$103.53 a barrel.

Gold rebounded US$11.60 or 0.6 per cent to US$1,907.60 an ounce.

More From The Market Herald

" ASX Close: Sharp rebound trims a fourth week of losses

Australian shares rebounded strongly this session but could not avert a fourth straight weekly decline as financial markets continued to factor in the

" ASX Close: Back-to-back gains as market weathers China miss

The share market eked out back-to-back gains for the first time this month despite pressure on miners following confirmation the Chinese economy contracted

" ASX Update: Market pares gains as Chinese data disappoints

Takeover action and a relief rally on Wall Street helped lift the share market towards back-to-back gains for the first time this month.

" ASX Today: Bright start as US bounces, Shanghai reopens

Australian stocks were poised to open higher as lockdown news out of China over the weekend added to positive leads from Wall Street