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The share market suffered its biggest setback in two and a half weeks as declines in energy and mining stocks outweighed gains in companies reporting earnings.

The S&P/ASX 200 fell 18 points or 0.25 per cent to only its second loss in eleven sessions. The decline was the heaviest since a 20-point loss on October 11.

Woodside Petroleum and the mining majors led the retreat. ANZ, Newcrest, Coles and Fortescue Metals struggled to retain early gains after updating shareholders.

What moved the market

Weak leads from Wall Street and sharp declines in key commodities drove regional markets lower. In Australia, long-term interest rates hit an eight-month high, sharpening the debate about the RBA’s rates outlook.  

 The Asia Dow shed 0.2 per cent, China’s Shanghai Composite 0.93 per cent, Hong Kong’s Hang Seng 0.09 per cent and Japan’s Nikkei 0.98 per cent.

The declines came after the Dow and S&P 500 pulled back from record levels. The Dow slid 0.74 per cent overnight. The S&P 500 gave up 0.51 per cent.

The debate over interest rates continued. Commonwealth Bank said it now expects the RBA to raise the cash rate in November next year, six months earlier than previously forecast. The change reflects the bank’s belief high vaccination rates and the rapid easing of lockdown restrictions will drive a swift rebound in growth. The bank expects inflation to sit within the RBA’s target band by the middle of next year, clearing the way for a hike.

The change came as the prices of imported goods took their biggest leap in eight years, according to an ABS report today. Import prices increased by 5.4 per cent in the September quarter. Export prices jumped 6.2 per cent.

Long-term interest rates hit their highest since February. The yield on ten-year Australian government bonds touched 1.9 per cent. The spread between the Australian and US five-year yield blew out to its widest in four years.

The ASX 200 has risen steadily this month amid largely supportive outlooks from corporate chiefs during the annual general meeting and quarterly reporting season. Despite today’s setback, the index remained on track for a fourth straight weekly advance.

Winners’ circle

A 65 per cent increase in full-year cash net profit briefly powered ANZ to a two-month high. The bank declared a cash profit of $6.198 billion after reversing part of the Covid provisions made the previous year.

Retail and commercial lending increased, but second-half volumes in home lending were impacted by strong competition. This year’s dividend payout of $1.42 is more than twice last year’s Covid-affected 60 cents. Shares in the bank finished 0.74 per cent ahead at $28.60 after rising as high as $28.98.

CBA put on 0.72 per cent, NAB 0.51 per cent and Westpac 1.08 per cent.

Fortescue Metals inched up 0.14 per cent in a falling materials market after shipping 45.6 million tonnes of iron ore in Q1, a record for a first quarter. CEO Elizabeth Gaines said the company’s diversification strategy gained momentum with plans to develop a renewable energy and green hydrogen manufacturing centre in Queensland.  

Coles bounced 0.12 per cent upon reporting a 1.8 per cent increase in supermarket sales last quarter. Liquor sales increased by 2.6 per cent. The company incurred additional costs related to Covid of $75 million.

Newcrest gained 0.84 per cent despite a 21 per cent decline in gold production last quarter. Production was affected by planned maintenance activity. Managing Director and CEO Sandeep Biswas said the result was “in line with our expectations”.

Takeover target Australian Pharmaceutical Industries gained 0.66 per cent after reporting a 0.4 per cent dip in full-year revenues. Net profit was a slender $1.1 million as lockdowns dented the pharmacy wholesaler’s retail business. The company’s share price has been inflated by a two-way bidding war between Wesfarmers and Sigma Health.

Boral was among the session’s best performers, rising 4.59 per cent after CEO Zlatko Todorcevski told today’s AGM the earnings hit from Covid lockdowns and disruption was smaller than expected. The actual earnings impact of increased costs and lower volumes was $33 million, below the $50 million previously flagged.

Post-lockdown signs of improvement this month helped lift JB Hi-Fi 3.28 per cent despite a slow start to the financial year. Australian sales were 7.9 per cent lower than last year, due to lockdowns. CEO Terry Smart said sales momentum picked up this month as NSW reopened.

Doghouse

Energy and metals miners led the retreat after Chinese attempts to rein in coal prices sent shudders through commodity markets.

“China’s plan to limit coal prices sparked a selloff across the commodity complex,” ANZ senior commodity strategist Daniel Hynes said. “Aluminium prices plunged as concerns of supply disruptions due to energy shortages eased,” he added.

Iron ore futures fell as expectations of further constraints on Chinese steel production increased.”

Coal miners slumped after Chinese prices traded limit down yesterday following a government crackdown on hoarding and speculation. Whitehaven Coal fell 4.95 per cent. New Hope shed 1.41 per cent.  

Alumina sank 4.74 per cent after aluminium hit a two-month low in Shanghai. The metal slumped 5.4 per cent on the London Metal Exchange overnight.

Woodside Petroleum slid 2.47 per cent, Rio Tinto 1.47 per cent and BHP 1.7 per cent. Other heavyweight drags included Afterpay -2.37 per cent, Woolworths -1.02 per cent and Macquarie Group -0.74 per cent.

Investment manager IOOF fell 8.5 per cent after reporting net outflows last quarter of $0.9 billion in funds under administration and $1.4 billion in funds under management.

Gaming company PointsBet dived 18.28 per cent after reporting a quarterly loss of $26.5 million. Customer receipts of $72.4 million were outweighed by staffing, operating and marketing costs.   

Other markets

US futures shrugged off Asian declines. S&P 500 futures firmed seven points or 0.16 per cent.

Oil added to overnight losses. Brent crude sagged $US1.55 or 1.85 per cent to US$82.32 a barrel.

Gold rallied US$3.90 or 0.22 per cent to US$1,802.70 an ounce.

The dollar firmed 0.12 per cent to 75.09 US cents.

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