Market Herald logo

Subscribe

Be the first with the news that moves the market

The share market clawed back a fraction of this month’s heavy losses, rising for the first week in three as some of this year’s worst-performing sectors rebounded.

The S&P/ASX 200 climbed 50 points or 0.77 per cent this afternoon. The advance sealed a weekly rise of 104 points or 1.6 per cent.

The battered tech sector bounced 6 per cent today, boosted by a decline in the cost of long-term borrowing. Speculative and small caps also rose in a sign of improved risk appetite. Commodity stocks struggled after losses for copper and crude.

What moved the market

Financial markets steadied this week after two weeks of bloodletting. The ASX 200 improved on three out of five sessions. Today’s advance sealed back-to-back gains for the benchmark for the first time since late May.

“After two weeks of carnage, global stocks have steadied over the recent trading sessions, with some of the stocks rebounding from oversold territory,” the chief executive of Kalkine Group, Kunal Sawhney, said. “However, it will be too early to say that a bottom is in place.”

Markets have been smashed this month by fears a central bank attack on inflation risks tipping the global economy into recession. The only real tool at the banks’ disposal is interest rates. In theory, higher rates curb demand, which eventually is reflected in lower prices.  

The US Federal Reserve “has repeatedly stressed the importance of bringing down inflation to its target level of 2%. And rate hike has emerged as a blunt tool to achieve this target as it risks causing damage to the economy, worrying investors,” Sawhney said.

“Meanwhile, stubbornly high inflation has pressured consumers to shift spending from big ticket items to necessities. So, except for consumer staples, utilities and healthcare, companies in most other sectors could witness pressure on their earnings in the coming quarters, and stock prices are going to reflect that.”

This month’s trade highlights the old adage that the market takes the stairs up and the elevator down. The ASX 200 lost 10.5 per cent in ten days and needed five days to recoup less than a fifth.

Today’s rise followed a positive session on Wall Street as bonds yields retreated. The S&P 500 rallied 0.95 per cent, keeping it on course for a positive week.  

Winners’ circle

The tech sector climbed to its highest in more than a week after the Nasdaq Composite led US gains overnight. App-maker Life360 soared 24.9 per cent, biotech Imugene 17.86 per cent and network provider Megaport 15.94 per cent.

The beaten-down buy now, pay later sub-sector enjoyed a rare day in the sun. Zip Co bounced 21.59 per cent. Afterpay parent Block put on 10.94 per cent. Sezzle soared 13.21 per cent. Splitit gained 9.09 per cent.

Lithium miners rebounded from days of heavy selling pressure. Lake Resources bounced 15 per cent. Liontown gained 10.8 per cent, Pilbara Minerals 8.78 per cent and Core Lithium 8.93 per cent.

A cash injection from European carmaker Stellantis lifted lithium junior Vulcan Energy 26.8 per cent. Stellantis will pay $76 million for an eight per cent stake in Vulcan, making it the miner’s second-largest shareholder. The companies have an offtake agreement to 2035.

At the heavyweight end, property giant Goodman firmed 3.26 per cent, retail conglomerate Wesfarmers 1.81 per cent, biotech CSL 1.4 per cent and Telstra 1.57 per cent.

Gaming software group BetMakers bounced 20 per cent off a two-year low on news of an on-market share buyback. The company will buy back up to ten per cent of issued capital from July 12.

Doghouse

Energy was the session’s worst performer in the wake of Brent crude’s six-week low. Oil prices have come off sharply this week, along with other commodities, as traders anticipate weaker demand as the global economy slows.

“This week hasn’t been good for oil traders. Basically, traders and investors are concerned about the looming recession, and they have started to believe that a slowing global economy would have a negative influence on oil demand,” Naeem Aslam, chief market analyst at AVATrade, said.  

“In addition to this, we know that next week, OPEC is going to increase its planned production during their meeting. So, by the end of August, we would have all the supply back on the market, which the cartel scaled back due to covid.”

Woodside Energy eased 1.7 per cent, Santos 1.77 per cent and Viva Energy 2.48 per cent. Ampol shed 2.61 per cent.

Declines in industrial metals helped drag Oz Minerals down 2.09 per cent. South32 lost 1.48 per cent, Rio Tinto 1.2 per cent and BHP 1.19 per cent.

Agribusinesses Nufarm and Elders gave up 1.58 and 1.43 per cent, respectively. Prices for wheat and oats have declined this week with other soft commodities.

Qantas slipped 1.55 per cent despite confirmation the airline’s debt levels continue to improve as travel volumes picked up. Net debt will fall from $6.4 billion at the peak of the pandemic to around $4 billion by the end of this month. Full-year underlying earnings were on track to be between $450 and $550 million.

A collapse in corporate fee income drove broker and financial advisor Bell Financial Group down 19.43 per cent to a two-year low. The firm expects first-half earnings to fall 45 per cent from the prior corresponding period, due in large part to loss of fees resulting from the current market turmoil.

Skincare product manufacturer BWX entered a trading halt, pending a trading update.

Other markets

US futures were boosted by a positive afternoon on Asian markets. The Asia Dow lifted 0.92 per cent. China’s Shanghai Composite tacked on 0.86 per cent, Hong Kong’s Hang Seng 1.93 per cent and Japan’s Nikkei 1.32 per cent.

S&P 500 futures climbed 32 points or 0.84 per cent.

Oil shook off early pressure, rising from a six-week low. Brent crude bounced 46 US cents or 0.43 per cent to US$106.92 a barrel.

Gold declined for a fifth session, sliding US$2.80 or 0.15 per cent to US$1,827 an ounce.

The dollar firmed 0.11 per cent to 69.1 US cents.

More From The Market Herald

" ASX Update: Tech stocks soar as miners, oilers swoon

A recovery in the beaten-down tech sector helped cushion the share market against a severe plunge on commodity markets.

" ASX Close: Commodities crunch outweighs tech bounce

A recession panic on commodity markets drove the Australian share market to its first loss of the week.

" ASX Today: Commodities plunge as recession fears swirl

A collapse in commodity prices points to early pressure on the ASX despite a huge comeback session for US stocks.

" ASX Close: Shares shrug off rate hike, rise for 2nd day

Australian shares rose for a second day after the Reserve Bank raised its benchmark rate by 50 basis points and exporters caught a