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The Australian benchmark lost its hold on 7000 amid concerns global equity markets have mispriced the risk of recession as interest rates rise.
The S&P/ASX 200 fell 85 points or 1.21 per cent to 6962. Today’s close was the first below 7000 in almost two weeks.
Gains in resource stocks and companies reporting earnings were outweighed by declines in consumer, banking and industrial stocks.
What moved the market
The market recovery since the lows of mid-June began to plateau last week, then rolled over. Today’s fall was the ASX 200’s fourth in a row.
The retreat followed Wall Street’s heaviest loss in two months. The S&P 500 slumped 2.14 per cent overnight.
“You’ve had quite a rally and there’s reason to not be sure where we’re going from here,” Tom Martin, senior portfolio manager with Globalt Investments, said. “There’s still decent potential for a recession.”
European stocks also declined ahead of an annual meeting of central bankers later this week. Federal Reserve Chair Jerome Powell is expected to use the event to reaffirm the bank’s commitment to forcing down inflation, even if it comes at the expense of economic growth.
Investors reduced their exposure as a sell-off on bond markets underscored growing concerns about the risk of recession. Yields, which move inversely to prices, rose to multi-week levels in both sides of the Pacific.
“The ASX200 is on track for its worst two days performance since late June as rising bond yields rattle equity markets ahead of this week’s Jackson Hole Economic Symposium for central bankers,” Tony Sycamore, market analyst at City Index, said.
“Tracking U.S yields higher, Australian yields are also rising again. 1-year yields are trading at 2.90%, at cycle highs. While 2-year yields are at 3.19%, their highest level in a month,” he said.
Winners’ circle
A strong growth forecast and full-year result lifted software developer Altium 19.75 per cent. Revenues grew 23 per cent in FY22. Underlying earnings margin expanded to 36.7 per cent. The company expects revenue growth of 15-20 per cent this fiscal year.
An improved second half helped raise Ansell 8.59 per cent. The personal protective equipment manufacturer met revised full-year guidance as margins improved and sales grew. The company reported a 36 per cent decline in profit to US$158.7 million.
A maiden full-year profit of $561.8 million lifted lithium miner Pilbara Minerals 3.15 per cent. Sales revenues jumped 577 per cent to $1.2 billion.
Mining services supplier Perenti firmed 2.14 per cent after beating the top end of revised full-year earnings guidance.
Westfield landlord Scentre Group put on 2.16 per cent following a 17.5 per cent hike in half-year profit to $540.5 million.
Strong demand for maintenance services helped Monadelphous boost full-year net profit by 11 per cent to $52.2 million. The share price surged 5.86 per cent to its highest since early June.
Among other companies reporting, ARB corporation rose 0.97 per cent, Charter Hall Retail REIT 1.99 per cent, Alumina 0.33 per cent, Boral 2.42 per cent and Estia Health 1 per cent. SiteMinder fell 0.51 per cent, The Reject Shop 4.66 per cent, HUB24 1.92 per cent and Nanosonics 1.68 per cent,
Doghouse
Dan Murphy’s owner Endeavour plunged 12.33 per cent after warning the pandemic boost to home consumption will continue to wear off this fiscal year. The return of Australians to pubs helped the group increase full-year profit by 11.2 per cent to $495 million.
Declines in full-year profit and revenue dragged Kogan down 6.58 per cent. The online retailer’s revenue slid 8 per cent as the company worked through excess inventory. Gross profit fell 9.3 per cent.
“eCommerce did not continue to grow as anticipated. This led to us holding excess inventory, and an associated increase in variable costs and marketing costs to sell through the inventory,” founder and CEO Ruslan Kogan said.
Credit Corp sank 6.1 per cent on news the company intends to remediate customers erroneously charged interest during the pandemic. The remediation program is not expected to have a material impact on this fiscal year’s result.
Kitchen appliance manufacturer Breville dipped 0.09 per cent despite record full-year revenue of $1.4 billion and sales growth of 19.4 per cent.
Other markets
Asian markets tracked weakness in Europe and the US. The Asia Dow shed 1.26 per cent, China’s Shanghai Composite 0.11 per cent, Hong Kong’s Hang Seng 0.8 per cent and Japan’s Nikkei 1.18 per cent.
US futures faded for a third day. S&P 500 futures dipped six points or 0.13 per cent.
Oil rose in volatile trade. Brent crude overcame a dive into negative territory to advance 67 US cents or 0.7 per cent to US$97.15 a barrel.
Gold bounced US$1.50 or 0.1 per cent to US$1,749.90 an ounce.
The dollar was broadly steady at 68.77 US cents.
