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A rebound in commodity prices helped limit Australian losses following a late fade on Wall Street.  

Gains in energy producers, miners and utilities partly offset declines in tech stocks and defensive assets.

The S&P/ASX 200 eased 16 points or 0.24 per cent by mid-session.

What’s driving the market

Aussie stocks struggled for traction following reports the world’s most valuable company was preparing for a global economic slowdown. Bloomberg reported Apple planned to cut back on hiring and cap spending in some units.

The reports followed similar warnings from fellow US multinationals Tesla, Google and Facebook owner Meta Platforms. Tesla, Netflix and Twitter all announced layoffs recently as rising interest rates and soaring prices dampened expectations for consumer spending.

“Apple’s move reflects a broader slowdown in investing in new things, new companies and new products,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Reuters. “It signifies that inflation is an issue for these companies.”

The S&P 500 gave up early gains as the Apple report overshadowed trading updates from Goldman Sachs and Bank of America. The US benchmark fell 0.84 per cent. The Dow shed 0.69 per cent.

Resource stocks helped the ASX 200 retain most of yesterday’s 81.5-point surge. Crude oil, iron ore and metals rebounded after Chinese authorities pledged support for the economy.

The minutes from this month’s Reserve Bank meeting showed policy-setters discussed increasing rates by 25 or 50 basis points before deciding the case for the latter was stronger. The bank lifted the cash rate target to 1.35 per cent and is expected to hike again next month.

“Members agreed that further steps would need to be taken to normalise monetary conditions in Australia over the months ahead,” the minutes said.

“The size and timing of future interest rate increases will continue to be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market, including the risks to the outlook.”

Consumers became slightly less pessimistic about the economy, according to the ANZ-Roy Morgan weekly survey released this morning. The confidence index ticked up 0.2 per cent to 81.8 but remained near two-year lows.

Going up

Energy majors Woodside and Santos surged with crude prices on reports US President Joe Biden’s trip to Saudi Arabia was unlikely to lead to increased production. A relief rally lifted Brent crude 5.1 per cent overnight. US oil closed above US$100 a barrel for the first time in more than a week.

Woodside climbed 3.58 per cent. Santos gained 2.51 per cent. Beach Energy tacked on 3.5 per cent.

Fortescue Metals firmed 1.89 per cent as iron ore built on this week’s rebound. The most-traded ore contract on the Dalian Commodity Exchange gained 0.45 per cent this morning. Rio Tinto added 0.4 per cent.  

Lithium miner Lake Resources rallied 8 per cent. Whitehaven Coal climbed 4.24 per cent to a new record. New Hope put on 3.95 per cent.

Paladin Energy firmed 0.79 per cent on news production will restart at the uranium miner’s flagship Langer Heinrich Mine in Namibia. The mine was placed on care and maintenance in 2018 when falling uranium prices made it uneconomic. First volumes are expected to be produced in early 2024.

Record full-year sales and earnings lifted JB Hi-Fi 4.38 per cent. The retailer’s FY22 earnings increased 6.9 per cent, thanks in large part to a 33.4 per cent surge over the second half as sales and margins improved. Online sales increased 52.8 per cent across the year to $1.6 billion.

Going down

Record full-year iron ore sales volumes helped raise BHP before a late-morning fade. The miner met full-year production guidance for ore and energy coal, as well as revised guidance for copper and metallurgical coal.

Nickel volumes fell short following a smelter outage. The share price dipped 0.27 per cent once early gains dissipated.

Bond proxies declined as yields continued to recover. The ten-year Australian government bond yield rose four basis points this morning to its highest in a week. Supermarkets Woolworths and Coles dropped 1.39 and 0.64 per cent, respectively.

Among healthcare providers, CSL lost 1.75 per cent, ResMed 4.1 per cent and Sonic Healthcare 4.05 per cent.

In the property space, Goodman shed 2.25 per cent, GPT Group 1.91 per cent and Charter Hall Group 1.03 per cent.

Superannuation tech firm HUB24 dropped 5.63 per cent as a flat quarter took some of the shine off record annual net inflows. The company said fourth-quarter net inflows of $2.5 billion were “broadly flat” relative to the prior corresponding period, excluding large transactions. The full-year net inflow of $11.7 billion was 31.7 per cent up on FY21.

Other tech losses included WiseTech, down 4.48 per cent, and Xero, off 4.79 per cent.

Insurer QBE eased 0.26 per cent after setting aside US$75 million to make good on failures to meet a pricing promise to policyholders. The firm said it would work with ASIC to remediate affected customers.  

Other markets

Asian markets were mixed but mostly lower. The Asia Dow dropped 0.33 per cent. China’s Shanghai Composite dipped 0.1 per cent. Hong Kong’s Hang Seng fell 1.09 per cent. Japan’s Nikkei gained 0.67 per cent.

S&P 500 futures rallied 10 points or 0.27 per cent despite a soft after-market trading update this morning from IBM.

Gold faded US$5 or 0.3 per cent to US$1,705.20 an ounce. Brent crude was unchanged at US$106.27 a barrel.

The dollar climbed 0.24 per cent to 68.26 US cents.

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