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The share market faded towards a second straight weekly loss as index heavyweight Commonwealth Bank joined the major miners in negative territory.
The S&P/ASX 200 dipped a point or 0.01 per cent to extend its decline for the week to around five points or less than 0.1 per cent.
The market briefly threatened to defy the odds at the end of a week that encompassed a six-week low, a cryptocurrency crash and the local market’s biggest setback in three months. The index rose as much as 37 points in early action before the rot set in.
The tech sector outperformed for a second day. Bond proxies such as healthcare, consumer staples and utilities caught a lift from falling yields. Miners fell for a third session.
What’s driving the market
Positive overnight leads proved insufficient to offset lingering market nerves following Wednesday’s wobble. Equity markets tumbled mid-week as cryptocurrencies crashed. Bitcoin plunged as much as 31 per cent to US$30,445 before rebounding.
US futures rallied this morning as the healing continued. Bitcoin climbed 3.1 per cent to US$41,356. S&P 500 futures rose four points or 0.1 per cent. Overnight, the S&P 500 gained 1.06 per cent.
“The recent synchronisation seen between Bitcoin price movement and the US equity market following the cryptocurrency market crash appears alarming. Surprisingly, the US stocks have been closely tracking losses and recovery in the cryptocurrency market over the past two days, moving in line with investors’ appetite for riskier assets,” Kalkine Group CEO Kunal Sawhney said.
“With cryptocurrencies gaining mainstream adoption over time, a domino effect in the stock market seems to be more digestible than ever,” he added.
The ASX 200 plunged 1.9 per cent on Wednesday – its worst decline since February – to a six-week low. Despite that setback, the index looked set to end the week with minimal damage, thanks to a strong rebound yesterday and steady gains at the start of the week.
A week for fallen stars saw the battered tech sector rise 1.14 per cent this morning to its highest level in almost two weeks. EML Payments climbed 16.49 per cent, Xero 3.68 per cent and Nuix 3.52 per cent.
A2 Milk climbed 6.8 per cent further from this week’s four-year low. Bubs Australia rose 5.88 per cent. Blackmores rallied 2.16 per cent.
The morning’s economic data confirmed the recovery remained on track. Retail sales jumped 1.1 per cent last April, twice the market consensus. Markit’s manufacturing PMI edged up to 59.9 this month from 59.7 in May. Services industry and composite PMIs eased a fraction but remained at historically high levels.
Going up
Tech stocks set the early running, but the heavy lifting was done by companies that attract fund flows when bond yields decline. The yield on ten-year Australian government bonds dropped almost three basis points this morning, mirroring a retreat in the US.
Healthcare leader CSL climbed 2.18 per cent, property giant Goodman Group 1.65 per cent and supermarkets Coles and Woolworths 1.16 and 1.28 per cent, respectively. Further down the food chain, Cromwell Property gained 1.67 per cent, ResMed 2.94 per cent and Domino’s Pizza 1.08 per cent.
Westpac was the best of the banks, rising 0.72 per cent. ANZ edged up 0.32 per cent and NAB 0.19 per cent. CBA eased 0.08 per cent off yesterday’s record close.
Travel companies steadied after yesterday’s hit from a Qantas announcement that the airline will slash commissions it pays on plane tickets. Corporate Travel Management advanced 4.1 per cent, Webjet 5.79 per cent and Flight Centre 1.67 per cent.
Aristocrat Leisure rode Monday’s earnings upgrade to a new all-time high. Shares in the gaming machine manufacturer hit a record $41.44 and were last up 0.32 per cent at $40.65.
Going down
Kogan sank 11.53 per cent after warning growing pains caused by last year’s rapid expansion meant the online retailer was likely to miss full-year earnings expectations.
Supply-chain problems and higher warehousing costs due to a build-up of inventory cut the retailer’s expected full-year adjusted earnings to $58 – $63 million. The company said this projection was “likely to differ from the current range of analyst forecasts”. The retailer’s share price hit a record $25.57 during the pandemic, but has since more than halved to $8.91.
Woodside slid 3.18 per cent to its lowest level since December as the prospect of the lifting of sanctions on Iran weighed on crude prices. Santos sagged 4.39 per cent, Oil Search 2.55 per cent and Beach Energy 1.38 per cent.
The big miners retreated for a third day since China threatened to increase domestic iron ore production. Rio Tinto shed 2.37 per cent, Fortescue Metals 2.15 per cent and BHP 1.62 per cent. Gold miner Newcrest reversed 1.22 per cent despite a sixth straight advance in the yellow metal overnight.
“If the recent pullback in iron ore and oil prices is seen from the angle of a sharp run-up in 2021, it appears to be a healthy correction,” Kalkine’s Mr Sawhney said. “With most countries grappling with rising inflation and yet to tighten their monetary and fiscal policies, the commodity price rally is expected to continue for quite some time.”
Other markets
A mixed morning on Asian markets saw the Asia Dow gain 0.17 per cent and Japan’s Nikkei add 0.39 per cent. China’s Shanghai Composite shed 0.57 per cent. Hong Kong’s Hang Seng lost 0.41 per cent.
Oil declined for a fourth session. Brent crude dropped 17 cents or 0.26 per cent to US$64.94 a barrel. Gold fell $9.80 or 0.52 per cent to US$1,872.10 an ounce.
The dollar retreated 0.18 per cent to 77.55 US cents.
