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The share market fell to a two-month low as investors braced for another jumbo US rate hike.
The S&P/ASX 200 dropped 19 points or 0.28 per cent to 6719.9, its weakest close since July 19.
Gains in real estate investment trusts and gold and lithium miners were outweighed by declines across the wider market. Tech stocks and utilities were the biggest drags.
What moved the market
A holiday-interrupted week got off to a downbeat start as US equity futures hinted at further weakness ahead of this week’s rates announcement.
The ASX 200 hit its session low as US futures dived 0.4 per cent. S&P 500 futures pared their fall to 11 points or 0.28 per cent by the Australian close.
“After being horrendously wrong-footed twice in the past three weeks by reversals on Wall Street, the ASX200 has traded in light volume, with no interest in making the same mistake a third time in quick succession,” Tony Sycamore, market analyst at City Index, said.
US stocks sank to a two-month low on Friday ahead of another Federal Reserve rates decision. The central bank meets tomorrow and will announce the new target federal funds rate on Thursday morning, Australian time. The ASX will close on Thursday to mark the passing of Queen Elizabeth II.
The S&P 500 shed 0.72 per cent. Importantly, the index closed below a key support level, suggesting further weakness this week.
“As the S&P 500 hovers below the all-important 3,900 level, and the 10-year Treasury yield inches ever closer to 3.5%, the Fed-sensitive 2-year Treasury note flirts with 3.9%, suggesting that the Fed’s aggressive campaign to kill off inflation is to be taken seriously,” Quincy Krosby, chief global strategist at LPL Financial said. “The canary in the coal mine may not yet be dead, but is probably struggling to breathe.”
The Australian dollar came back under selling pressure this afternoon. The Aussie hit a two-year low of 66.7 US cents on Friday and faded 0.43 per cent today 66.96 US cents. A weaker dollar is a plus for exporters, a negative for importers. This year’s decline has come as risk aversion lifts the US dollar index to its highest in around two decades.
Winners’ circle
A Friday bounce in gold lifted industry heavyweight Newcrest 1.68 per cent off a near six-year low. Sandfire gained 3.37 per cent, Northern Star 2.84 per cent and St Barbara 2.5 per cent.
The real estate investment trust sector steadied near a two-and-a-half-month low as bond yields retreated. Abacus Property firmed 2.65 per cent, GPT Group 2.23 per cent, SCA 2.02 per cent and Scentre Group 1.82 per cent.
Confirmation of progress at Lake Resources’ demonstration plant in Argentina sent the lithium miner’s share price soaring 12.37 per cent. Lake said a facility to house the demonstration plant was complete and the firm was confident on-site operations would be successful. The share price tumbled last week after the miner reported a dispute with project partner Lilac Solutions.
A strong day for lithium miners saw Pilbara Minerals add 3.49 per cent, Mineral Resources 2.43 per cent and Allkem 1.79 per cent.
Hedge fund sponsor Regal Partners rallied 3.14 per cent after winning a mandate worth more than $420 million from a large domestic superannuation fund. The mandate will expand the firm’s $5 billion in funds under management as of August 31.
Imugene finished flat after the Australian gene technology regulator greenlit an expansion of the firm’s phase 1 Vaxinia clinical trial for treating cancer.
Doghouse
Link Administration eased 2.02 per cent to a three-month low after rejecting the latest revised offer from Dye & Durham. The Canadian firm revised its acquisition proposal to $3.81 per share with fresh conditions after the UK regulator warned a Link subsidiary could face heavy fines relating to a collapsed fund. The Link board said it was unable to recommend the new proposal.
Infomedia fell 4.41 per cent after reporting it had not received acceptable binding offers from either of two parties competing to acquire the automotive tech firm. The company said it would close its virtual data room on September 30 in the absence of an acceptable binding proposal.
Origin Energy will divest its gas interest in the Beetaloo Basin in the Northern Territory as part of a shift towards greener energy. Tamboran Resources will raise $133 million to buy the interest. Origin’s share price eased 0.86 per cent. Shares in Tamboran were placed in a trading halt.
Rival AGL lost 1.97 per cent after announcing management and boardroom reshuffles. CEO Graeme Hunt and Chair Peter Botten will both stand down.
Splitit shed 7.14 per cent on news the US financial regulator plans to regulate buy now, pay later lenders similarly to credit card companies. The firm said it would be largely unaffected by the change.
Other markets
A weak session on Asian markets saw the Asia Dow fall 0.52 per cent, China’s Shanghai Composite 0.61 per cent and Hong Kong’s Hang Seng 1.19 per cent. Trade in Japan was suspended for a public holiday.
Oil added to Friday’s rebound. Brent crude rallied 31 US cents or 0.3 per cent to US$91.66 a barrel.
Gold slipped US$7.60 or 0.45 per cent to US$1,675.90 an ounce.
