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The share market declined for a second month despite a strong recovery in recent weeks as China started to reopen and inflationary pressures eased.

The S&P/ASX 200 booked a 3 per cent loss for May after falling 75 points or 1.03 per cent today.

A two-day rally stalled amid end-of-month institutional selling and as traders took profits ahead of the resumption of US trade after Memorial Day. Slim gains for some miners and agribusinesses were dwarfed by declines in banks and tech stocks.

What moved the market

Heavy falls through the first half of a volatile month sealed back-to-back monthly losses for the first time this year. The ASX 200 hit a 15-week low on May 12 before a relief rally in the US gained momentum.

The market mood improved markedly after the Federal Reserve indicated it may pause rate increases as soon as September if inflation continues to cool. China added to the upward momentum as Covid restrictions in Shanghai and Beijing started to relax.

Australian stocks punched to a three-week high yesterday before giving some back this session as trade turned cautious ahead of tonight’s US session. US equity futures remained in positive territory but below previous highs. S&P 500 futures more than halved their advance to eight points or 0.2 per cent.

Investors had a barrage of economic data to interpret this session. Chinese manufacturing and services-sector activity contracted less than expected this month. The manufacturing PMI ticked up to 49.6 from 47.4 last month. The services PMI improved to 47.8 from 41.9 in April.  

Back home, private-sector credit and company operating profits were both stronger than expected, offsetting weak results for building approvals and the current account.

Consumer confidence, already at low levels, showed little response to the federal election. The ANZ-Roy Morgan confidence index dipped 0.1 per cent.

Winners’ circle

Bulk metal miners were boosted by overnight gains in iron ore and industrial metals as China eased Covid restrictions. Fortescue Metals put on 1.31 per cent. Rio Tinto added 0.57 per cent.

De Grey Mining added 4.63 per cent, Whitehaven Coal 3.53 per cent and South32 2.46 per cent.

Agribusinesses strengthened. Elders firmed 1.44 per cent, United Malt 1.59 per cent and GrainCorp 0.61 per cent. Fruit and veg wholesaler Costa Group added 1.93 per cent.

Appen rose for the first time in three days since Canada’s Telus International walked away from takeover talks. The data sourcing firm shrugged off a broker downgrade from Wilsons, rising 2.38 per cent.

Doghouse

The tech sector gave back some of yesterday’s 4.6 per cent rally. Megaport shed 5.43 per cent, Xero 2.97 per cent and Altium 2.77 per cent.

In the fintech space, Zip Co eased 6.15 per cent, Tyro Payments 6.61 per cent, EML Payments 5.96 per cent and Afterpay parent Block 2.96 per cent.

Dairy stocks lost altitude after surging yesterday on news the US was fast-tracking imports of infant formula to meet a national shortage.

Australian Dairy Group rolled over to a loss of 9.02 per cent after announcing it was working with authorities to gain access for its Gradulac Gentle range. Bubs shaved yesterday’s 40 per cent rally, falling 8.82 per cent. A2 Milk, which also has applications in the pipeline, inched up 0.63 per cent.

Crown Resorts declined 0.54 per cent after being whacked with an $80 million fine for breaches of Victoria’s Casino Act. The Victorian Gambling and Casino Control Commission said Crown helped gamblers circumvent restrictions on Chinese foreign currency movements by disguising spending on gambling as hotel expenses.

Centuria Capital announced the acquisition of $223 million worth of healthcare and retail assets. The acquisitions include a private hospital development in Sydney and a shopping centre near Newcastle. The share price dropped 0.89 per cent.  

Orica dipped 1.34 per cent as its shares traded ex-dividend.

Other markets

Oil hit a two-month high after European Union leaders reached a deal to halt roughly 90 per cent of Russian imports by the end of the year. Brent crude for July delivery settled 1.9 per cent higher overnight at US$121.67 a barrel. The international benchmark climbed another US$1.65 or 1.36 per cent this afternoon to US$123.32 a barrel.

Asian markets were mixed as energy prices re-emerged as a headwind for the global economy. The Asia Dow was steady. Japan’s Nikkei dropped 0.33 per cent. China’s Shanghai Composite added 0.74 per cent. Hong Kong’s Hang Seng gained 0.92 per cent.

The dollar was broadly steady at 71.92 US cents after trading briefly above 72 US cents overnight.

Gold declined US$1.30 or 0.1 per cent to US$1,856 an ounce.

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