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The share market slumped 2.5 per cent towards its second-heaviest loss of the year after the Dow closed on the edge of a correction overnight.
The S&P/ASX 200 dived 182 points or 2.52 per cent by mid-session. A final loss on that scale would be the largest since January 6. The benchmark dipped briefly below 7000 for the first time in three weeks.
Gains in gold miners were dwarfed by declines in tech stocks, oil companies and iron ore producers. Mobile app firm Life360, tech favourite Appen and retailer City Chic Collective led the sell-off. Construction firm CIMIC jumped on takeover interest.
What’s driving the market
Wrong-footed yesterday, the ASX wasted no time narrowing the performance gap with Wall Street. The local market had largely weathered the storm triggered by Russia’s incursion into Ukraine, but could not ignore a fifth losing night in the US.
The Dow Jones Industrial Average crumbled 465 points or 1.38 per cent overnight to finish within a few points of joining the S&P 500 in a technical correction. (A correction is defined as a close at least 10 per cent below a previous peak.) The Nasdaq Composite skidded 2.57 per cent to extend its decline from last year’s peak to 18.8 per cent.
“Pessimism regained the upper hand yesterday and US stocks fell more forcefully. A 2.6% fall in the NASDAQ leaves it at its lows for the year and down almost 16.7% year-to-date. The S&P500 dropped 1.84% leaving it down more than 11% for the year,” ING’s economics team wrote.
The ASX accelerated losses after the Ukrainian government appealed to the United Nations for military assistance. The UN Security Council was set to hold an emergency session at 9.30pm New York time. S&P 500 futures fell 30 points or 0.7 per cent.
Despite today’s carnage, Australian stocks have outperformed Wall Street so far this month during a generally positive earnings season and amid perceptions the resources-heavy ASX could benefit in the long term from sanctions against Russia.
At today’s low, the ASX 200 was 8.3 per cent off its August record, versus an 11.9 per cent decline on the S&P 500.
The scale of this morning’s retreat was exaggerated by a 6.43 per cent decline in index heavyweight BHP as its shares traded without a fat dividend. The miner accounts for 11 per cent of the total value of the index.
Going up
Construction firm CIMIC soared 33.44 per cent to $22 after majority shareholder Hochtief offered to buy any shares it does not own at $22. The German giant’s Australian subsidiary owns more than 78 per cent of CIMIC.
Nine Entertainment jumped 3.87 per cent after increasing profit by 20 per cent last year to $213 million. Profits were boosted by record television revenues and strong growth at the media group’s Stan Sport streaming platform.
Record underlying half-year earnings lifted Qube Holdings 1.25 per cent. The logistics provider increased its interim dividend by 20 per cent to 3 cents fully franked after raising revenues by 26.7 per cent.
NextDC bucked the tech downtrend, rising 3.73 per cent after a record first half prompted an earnings upgrade. The data centre provider lifted its full-year underlying earnings forecast to $163-$167 million from previous guidance to $160-$165 million.
Lovisa soared 17.82 per cent on news revenues grew 48.3 per cent through the first half as the fashion retailer opened new stores. Gross profits increased by 50.5 per cent to $170.7 million.
Ramsay Health Care gained 1.08 per cent after CEO and Managing Director Craig McNally said the group was well placed to benefit from a backlog of surgical procedures. Lockdowns, restrictions on surgery and increased operating costs knocked half-year profits down 29.7 per cent.
In the gold space, Perseus jumped 12.42 per cent, Northern Star 3.2 per cent and Newcrest 0.87 per cent.
Among other companies reporting today, Service Stream rallied 12.58 per cent and Perpetual added 0.64 per cent. Blackmores shed 4.14 per cent, Resolute Mining 1.85 per cent, Telix Pharmaceuticals 5.13 per cent, Airtasker 1.99 per cent, Insignia Financial 1.04 per cent, Cromwell Property Group 1.69 per cent, TPG Telecom 5.62 per cent, Atlas Arteria 2.87 per cent, Bega Cheese 6.99 per cent, Slater & Gordon 14.93 per cent, Southern Cross Media 7.88 per cent and Iluka Resources 3.59 per cent
Going down
A tough earnings season for the tech sector continued with heavy punishment meted out today to Appen and Life360.
Machine learning specialist Appen dived 24.97 per cent to a four-year low on news profits fell 20 per cent last year.
Mobile app maker Life360 tanked 28.71 per cent as increased spending saw its full-year loss double to US$15.3 million despite increased revenues.
The declines helped drive the I.T. sector down 4.8 per cent to its lowest since June 2020. Afterpay parent company Block slid 9.76 per cent after the Nasdaq Composite lurched closer to a bear market overnight.
Novonix dropped 6.98 per cent, Tyro Payments 6.35 per cent and Codan 6.34 per cent. Link Administration dipped 0.09 per cent after reporting.
Travel stocks were under the pump following overnight declines in US airlines, cruise companies and hotels.
Flight Centre dropped 5.96 per cent after another half-year loss. A 98.1 per cent increase in revenues helped reduce the travel agent’s H121 loss to $194.2 million.
Qantas dipped 3.18 per cent after a 31.9 per cent improvement in revenues helped the airline more than half its half-year loss to $456 million.
A record full-year profit could not shield Rio Tinto from the cold market winds. The iron ore miner eased 3.03 per cent after warning production costs will increase this year.
Other markets
Asian markets paced overnight declines in the US. The Asia Dow slid 1.56 per cent, China’s Shanghai Composite 0.54 per cent, Hong Kong’s Hang Seng 1.8 per cent and Japan’s Nikkei 1.07 per cent.
Oil regained momentum after a pause overnight in its push towards US$100 a barrel. Brent crude firmed 85 US cents or 0.9 per cent to US$94.90 a barrel.
Gold rallied US$4.80 or 0.25 per cent to US$1,915.20 an ounce.
The dollar faded 0.28 per cent to 72.08 US cents.
