The share market fell to its lowest in nearly three weeks after Wall Street retreated ahead of key risk events, and gas suppliers wilted under the threat of proposed government price caps.
The S&P/ASX 200 dropped 49 points or 0.68 per cent by mid-session.
Energy suppliers Origin and AGL spearheaded the retreat as the federal government moved closer to imposing price limits on gas and coal. Miners, supermarkets and healthcare providers also retreated. Gains in oil producers and property stocks cushioned the market from a deeper fall.
What moved the market
This morning’s loss was broadly in line with pre-market indications following a dour end to last week on Wall Street. The S&P 500 fell away in late trade to a loss of 0.73 per cent as investors reduced their exposure before tomorrow night’s consumer inflation report and Wednesday’s Federal Reserve interest rate decision.
Economists anticipate the Fed will raise its benchmark rate by half a point. Some commentators anticipate another warning from the central bank that financial markets are too optimistic about a near-term top in this rates cycle.
“We think the markets are too sanguine on rates after the first quarter and we expect [Fed Chair] Powell to take a more hawkish tone and for the dots to indicate higher rates for a longer period of time than what is currently being priced in by the futures markets,” Cliff Hodge, chief investment officer at Cornerstone Wealth, said.
Friday’s losses sealed Wall Street’s worst week in two months. The Dow lost 2.77 per cent, the S&P 500 index 3.37 per cent and the Nasdaq Composite 3.99 per cent. By comparison, Australia’s benchmark index lost a relatively modest 1.1 per cent.
The ASX 200 set a six-month high on the first session of December, but has since fallen on five of the last seven sessions. The index is down 1.6 per cent so far this month. The retrace gathered pace after the Reserve Bank raised its benchmark rate and gave no hint of a pause when it next convenes in February.
Energy producers rebounded as crude rallied from a near 12-month low. Brent crude bounced 55 US cents or 0.7 per cent this morning to US$76.65 a barrel.
Woodside Energy firmed 1.81 per cent. Santos gained 1.05 per cent.
Lithium miner Sayona rallied 2.33 per cent after securing the final permit to resume spodumene production at a joint venture in Quebec next quarter. The miner acquired the mine last year in conjunction with Piedmont Lithium.
The morning’s best returns came from Megaport +4.02 per cent, BrainChip +3.91 per cent and Star Entertainment Group +3.35 per cent.
Shares in St Barbara and Genesis Minerals remained in a trading halt after the miners announced plans to merge to create a regional gold powerhouse. St Barbara will acquire all of the shares in Genesis via a scheme of arrangement to form a firm called Hoover House focussed on the Leonara district in WA.
Genesis shareholders will receive 2.0338 shares in St Barbara for each Genesis share. St Barbara will spin off its assets outside the Leonara district into a new ASX-listed company to be called Phoenician Metals.
Gas suppliers Origin and AGL slumped after the federal government pressed ahead with price cap proposals for gas and coal. Prime Minister Anthony Albanese recalled parliament to pass emergency legislation imposing a temporary cap of $12 a gigajoule on gas and $125 per tonne on coal. The PM said the cap could reduce energy bills by $230.
Origin Energy tumbled 7.37 per cent. AGL shed 2.31 per cent. Coal hauler Aurizon lost 3.42 per cent.
Payments platform Tyro plunged 17.28 per cent on news takeover talks with Westpac and Potentia Capital Management ended without a deal. Westpac decided against submitting an offer after carrying out due diligence. Tyro broke off discussions with Potentia after extensive talks failed to generate a proposal the Board believes “fairly values” the company.
The Board said it remained open to engaging with any “credible” change of control proposal that represented compelling value for shareholders. Potentia’s latest offer of $1.60 per share valued the firm at $875 million.
Rio Tinto moved a step closer to absorbing Canada’s Turquoise Hill Resources after THR shareholders backed the proposed acquisition of the 49 per cent of outstanding THR shares Rio does not already own. The transaction still requires Canadian court approval. Rio’s share price eased 0.74 per cent
Endeavour Group dipped 0.79 per cent after the competition regulator raised concerns about the hotel and bottlo business’s proposed acquisition of the Beachfront Hotel in Rapid Creek, north of Darwin. The ACCC said the group already operated four BWS stores within five kilometres of the hotel.
A red morning on Asian markets saw the Asia Dow lose 0.85 per cent, China’s Shanghai Composite 0.39 per cent, Hong Kong’s Hang Seng 1.45 per cent and Japan’s Nikkei 0.31 per cent.
US futures trimmed a Sunday night decline. S&P 500 futures were lately down six points or 0.15 per cent.
Gold gave back most of Friday’s gains, falling US$7 or 0.4 per cent to US$1,803.70 an ounce.
The dollar declined 0.14 per cent to 67.69 US cents.