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Gains in Telstra, iron ore miners and bank stocks kept the share market near even despite a wave of selling among high-flying battery metals miners and a guidance warning from Origin Energy.

The S&P/ASX 200 dipped four points or 0.05 per cent by mid-session.

Heavy bloodletting among lithium and nickel miners was largely offset by advances at the heavyweight end of the market as a new month got underway. Origin Energy skidded almost 15 per cent after tearing up its earnings guidance.

What’s driving the market

Blue-chips rose as the market recovered from yesterday’s end-of-month portfolio rebalancing. Sixteen of the twenty giants of the ASX 20 rallied, lifting the heavyweight index 0.82 per cent.

By contrast, the speculative end of the market as measured by the S&P/ASX Emerging Companies Index skidded 2.3 per cent. The Small Ords dropped 1.8 per cent.

The flat headline figure for the ASX 200 masked heavy losses among battery metal producers, one of the best-performing corners of the market over the last few years. Lithium and nickel miners tumbled after Goldman Sachs predicted battery metal prices could fall heavily over the next two years.

The US investment bank expects lithium prices to suffer a “sharp correction”, falling by roughly three-quarters by next year as supplies exceed demand.

“We see the battery metals bull market as over for now,” Goldman said in an investor note issued on Sunday night.

Pilbara Minerals tanked 20.34 per cent after Credit Suisse cut its rating to ‘Neutral’. Nickel miner IGO shed 15.39 per cent. Liontown Resources dropped 20.85 per cent, Allkem (also cut to neutral by CS) 14.08 per cent and Mineral Resources 8.6 per cent. Junior nickel explorer Resource Mining Corporation lost almost a third of its value after announcing plans to drill in Tanzania.

The market took in its stride overnight falls on Wall Street as trade resumed after the Memorial Day long weekend. The S&P 500 dropped 0.63 per cent to its first loss in four sessions.

Investors were also untroubled by news economic growth slowed last month as the reopening boom at the end of last year faded. The economy expanded by 0.8 per cent  in the March quarter, down from growth of 3.6 per cent across the last three months of 2021.

Year-on-year growth was 3.3 per cent, ahead of expectations. The dollar firmed 0.06 per cent to 71.87 US cents.

“The first quarter GDP numbers seem to have surprised markets to the upside as economic activity increased 0.8% in the March quarter,” Kunal Sawhney, chief executive of research group Kalkine, said.

“The nation recorded better-than-expected GDP growth despite omicron-related challenges, supply-side disruptions, and massive flooding across the east coast. However, the GDP numbers exhibited a slowdown in economic growth compared to the previous quarter when the re-opening from virus shutdowns sparked a boom in economic activity.”

Going up

Telstra led the charge of the market heavyweights, rising 3.09 per cent. Fortescue Metals gained 2.21 per cent, Transurban 1.81 per cent and Coles 1.48 per cent.

In the banking space, Commonwealth Bank put on 1.88 per cent, ANZ 0.9 per cent and Westpac 0.75 per cent.

NAB firmed 0.78 per cent after completing the acquisition of Citigroup’s consumer business. CEO Ross McEwan said the purchase gave the bank “greater scale in unsecured lending and supports investment in new technology”.

Going down

Origin Energy slumped 14.67 per cent after commodity price volatility prompted it to scrap its 2023 guidance. The company attributed the decision to “extreme volatility across commodity markets”, which has affected coal deliveries and costs for its Eraring Power Station. FY22 earnings were expected to be in the mid-point of guidance of $1.95 – $2.25 billion.

“There is a very high degree of uncertainty around the range of earnings outcomes for the 2023 financial year. As a result, Origin has withdrawn all guidance for FY2023. Origin will continue to assess the outlook, with a view to providing an update at full year results in August,” the company said.

Growth stocks were pressured by a recovery in bond yields. Zip Co fell 6.56 per cent, PointsBet 8.42 per cent and Telix Pharmaceutical 6.01 per cent.

Mesoblast dipped 1.52 per cent after an uptick in revenues and lower research costs helped reduce its third-quarter loss. Revenues increased 5 per cent to US$2 million. Cash usage declined by 40 per cent to US$15.5 million. The loss for the quarter was US$21.3 million, down from US$26.5 million the previous quarter.

Other markets

A mixed morning on Asian markets saw the Asia Dow gain 0.42 per cent and Japan’s Nikkei advance 0.72 per cent. China’s Shanghai Composite dipped 0.09 per cent. Hong Kong’s Hang Seng shed 0.38 per cent.

US futures rallied after a positive trading update from Dow component company Salesforce. S&P 500 futures bounced 19 points or 0.47 per cent. Dow futures jumped 0.63 per cent.

Oil added to overnight gains. Brent crude for August delivery climbed 69 US cents or 0.6 per cent to US$116.29 a barrel.

Gold slipped US$9.40 or 0.5 per cent to US$1,839 an ounce.

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