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Aussie shares logged their first losing week in a month as fears of a rates-driven global slowdown weighed on equity markets.
The S&P/ASX 200 bounced 35 points or 0.47 per cent this session, not quite enough to reverse losses through the middle of the week.
Growth stocks struggled for a third day under the threat of higher borrowing costs. Mining stocks were the session’s best performers, supported by continued interest in supermarkets and other safe, defensive assets.
What moved the market
The Ukraine war was pushed onto the back-burner this week by the fast-changing rates outlook. Investors always knew rates were going to rise off record lows. This week brought greater clarity on when, how fast and how high, both here and overseas.
The ASX 200 hit a three-month high on Tuesday, the day of a Reserve Bank policy update, and has since fallen steadily. While today’s recovery trimmed the loss for the week to 16 points or 0.2 per cent, the index finished 95 points off Tuesday’s pre-update peak. The weekly loss was the first in four weeks.
Westpac joined several other banks in settling on June as the likeliest month for the first hike, since a raise during next month’s federal election would be politically sensitive. By June, the RBA will find itself some way behind overseas peers after the US Federal Reserve flagged a likely 50 basis-point raise next month.
While the rates outlook cast a long cloud, there were welcome signs of stirring in the somnolent market for initial public offerings. Four companies listed in the last two sessions, ending a lean run so far this year.
“The IPO market seems to be returning to life after a dull performance in the first quarter of 2022 amidst geopolitical concerns and expectations of a rate hike,” Kalkine Group CEO Kunal Sawhney said.
“The ongoing week has been particularly significant for the IPO market, in which a range of companies have listed successfully on the ASX. These companies comprise International Graphite, Microba Life Sciences, Top End Energy and Lord Resources.
“Several companies are due to list on the ASX in the current quarter, with nearly 20 companies planning to list in June only. However, these IPOs are subject to increased levels of market volatility amidst global market uncertainties.”
US stocks steadied overnight as dip-buyers took advantage of two and a half days of weakness. The S&P 500 recovered in afternoon trade to a gain of 0.43 per cent.
Winners’ circle
An earnings upgrade lifted GrainCorp 5.75 per cent to an all-time high. Strong demand for Australian grain and favourable winter planting conditions prompted the firm to raise its underlying earnings outlook to $590-$670 million from previous guidance of $480-$540 million.
“The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply. This has further increased both the demand for Australian grain and oilseeds and export supply chain margins,” Managing Director and CEO Robert Spurway said.
GrainCorp’s news lifted other agribusinesses. Fertiliser and herbicide firm Nufarm rallied 4.07 per cent. Rural services provider Elders opened strong before trimming its advance to 0.46 percent.
Uranium miner Paladin Energy jumped 13.12 per cent after the UK announced plans to build up to eight more nuclear reactors.
BHP climbed 1.7 per cent after independent expert KPMG ruled the merger of its petroleum assets with Woodside Petroleum was “fair and reasonable”. The export’s report increases the likelihood Woodside shareholders will back the proposed deal. Woodside shares fell 1.52 per cent.
Rio Tinto firmed 0.2 per cent ahead of tonight’s annual general meeting. Fortescue Metals gained 0.37 per cent and Champion Iron 2.26 per cent. OZ Minerals edged up 1.21 per cent during its annual general meeting.
Other heavyweights to advance included Newcrest +2.91 per cent, Santos +1.26 per cent, Telstra +1.26 per cent and Transurban +1.04 per cent.
GUD Holdings climbed 2.35 per cent after reaffirming full-year guidance. The swimming pool and auto-parts manufacturer said revenues rebounded last month despite weather-related challenges.
An eight-year contract worth $32 million lifted diagnostic imaging provider Pro Medicus 1.63 per cent. The company’s US subsidiary signed the deal with Inova Health, a leading healthcare provider in Northern Virginia.
Doghouse
Platinum Asset Management sank 15.02 per cent to a record low after reporting net outflows of $222 million last month. Funds under management contracted from $21.2 billion at the end of February to $19.4 billion. The fund manager’s share price has more than halved since August.
Navigator Global fell 8 per cent to $1.61 after raising $47 million at $1.55 per share to help buy a stake in US real estate investor Marble Capital.
Tech was among the worst-performing sectors for a third day. Block declined 1.39 per cent, WiseTech 1.62 per cent and EML Payments 1.76 per cent.
Real estate investment trusts also struggled. Scentre Group Energy shed 1.63 per cent and Mirvac 1.22 per cent.
Other markets
Asian markets turned mixed in afternoon trade after Shanghai reported record Covid cases. China’s Shanghai Composite gained 0.37 per cent. Japan’s Nikkei edged up 0.11 per cent. Hong Kong’s Hang Seng lost 0.26 per cent and the Asia Dow 0.02 per cent.
S&P 500 futures rallied four points or 0.1 per cent.
Oil rose the first time in four sessions. Brent crude firmed 22 US cents or 0.2 per cent to US$100.80 a barrel.
Gold trimmed overnight gains, falling US$3.50 or almost 0.2 per cent to US$1,934.30 an ounce.
The dollar inched up 0.12 per cent to 74.87 US cents.
