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A Facebook-fuelled collapse in US futures triggered heavy selling in Australian tech stocks, pulling the ASX 200 from a one-week high.
The Australian benchmark ended 10 points or 0.14 per cent lower as strength in mining and utility stocks helped offset broader market weakness and heavy bleeding in the I.T. sector.
What moved the market
A poorly-received after-market earnings update from Facebook parent Meta Platforms tossed the cat amongst the pigeons this morning. The social media giant lost more than a fifth of its value after missing on key metrics and warning of stagnating user growth. The share price fell 22.9 per cent in extended trade.
“There was a lot to not like,” the CEO of Metropolitan Capital Advisors, Karen Finerman, told CNBC.
The scale of the decline dragged US futures deep into the red. Nasdaq Composite futures dived 325 points or 2.15 per cent by the Australian close. S&P 500 futures shed 42 points or 0.9 per cent. The Dow – which does not count Meta as one of its components – dipped 0.04 per cent.
The Australian tech sector slumped 5.88 per cent. US payments giant Block led the retreat, falling 9.75 per cent after disappointing earnings from PayPal helped drag its US stock down 10.63 per cent.
Novonix gave up 14.68 per cent, Zip Co 9.63 per cent, WiseTech 7.97 per cent and Altium 6.94 per cent. Fund manager Magellan, which reportedly has a large holding in Meta Platforms, fell 7.47 per cent.
The collapse in market sentiment superseded a fourth winning night on Wall Street. The major indices gained between 0.5 and 0.94 per cent following a quarterly earnings beat from Google parent Alphabet.
In economic news, building approvals and business confidence rebounded towards the end of last year. The number of dwellings approved increased 8.2 per cent in December, according to the Australian Bureau of Statistics. Business confidence rebounded sharply over the final three months of the year as lockdowns lifted and vaccination rates took off.
Winners’ circle
Westpac rallied 2.28 per cent after slashing costs at head office and reporting a $1.82 billion net profit last quarter. Expenses declined 7 per cent, excluding notable items, as the bank stripped out costs under a three-year plan. Senior roles will be combined to produce a leaner executive team. Several senior executives will depart.
“We have made a sound start to the year and we are seeing the cost benefits of our simplification programs,” CFO Michael Rowland said. “The environment however remains highly competitive, and we continue to see pressure on margins.
“Given this, we are bringing forward our simplification plans and changing our operating structure to improve efficiency and move more of our people closer to the customers they support.”
Overnight gains in industrial metals kept the mining majors on the rise. BHP firmed 3.09 per cent, Rio Tinto 2.43 per cent and Fortescue Metals 3.27 per cent.
Other major movers included Telstra +1.26 per cent, Coles +0.73 per cent and ANZ +0.67 per cent.
Nufarm was the day’s best performer, rising 20.22 per cent after favourable weather helped the crop specialist increase quarterly revenue by 36 per cent. The company said it was “increasingly confident of revenue and earnings growth for the full FY22 financial year”.
Sydney Airport inched up 0.23 per cent after shareholders backed a takeover offer from a consortium headed by US group Global Investment Partners.
Nick Scali gained 0.97 per cent as buyers looked beyond a 6.6 per cent dip in half-year profit when more than half its stores were closed under lockdown. The furniture retailer increased revenue by 5.4 per cent.
Doghouse
Aristocrat Leisure declined 0.48 per cent after its bid to acquire UK firm Playtech collapsed. A vote overnight failed to deliver the 75 per cent shareholder support needed under Isle of Man law for the takeover to proceed. Rival groups built a blocking stake despite support for the Aristocrat bid from the Playtech board.
Growth stocks logged sharp losses as Nasdaq futures dived. Imugene dropped 8.96 per cent, HUB24 7.77 per cent and Polynovo 7.5 per cent. Life360 shed 7.28 per cent, Appen 6.75 per cent and Technology One 6.63 per cent.
Speculative stocks also came under the pump. The S&P/ASX Emerging Companies Index fell 2.56 per cent. The Small Ords dropped 1.74 per cent.
Online luxury goods retailer Cettire slumped 21.19 per cent after reporting an $8.3 million half-year net loss. A 192 per cent increase in gross revenue was offset by increased spending on advertising and marketing. Active customers more than doubled. Also pressuring the share price was the release of more than 62 million shares from escrow.
Other markets
Asian markets declined with US futures. The Asia Dow dropped 0.61 per cent. Japan’s Nikkei shed 0.97 per cent. Trade in China was suspended for the Lunar New Year break.
Oil reversed overnight gains after OPEC+ stuck to plans to increase production slowly next month. Brent crude eased 26 US cents or 0.3 per cent to US$89.21 a barrel.
Gold gave back US$2.90 or 0.16 per cent at US$1,807.40 an ounce.
The dollar steadied following early pressures at 71.22 US cents.
