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The share market retreated for the first time in five sessions after Wall Street’s winning start to 2023 lost momentum.
The S&P/ASX 200 declined 14 points or 0.19 per cent by mid-session. A loss today would be only the second in six sessions since the turn of the year.
Ten of eleven sectors declined. Only telecoms resisted the downtrend. Slender gains in some mining and defensive stocks were outweighed by declines across the wider market.
What’s driving the market
The ASX took a breather after a powerful opening surge on Wall Street gave way to profit-taking ahead of risk events this week. The Dow and S&P 500 rolled over to losses of 0.34 and 0.08 per cent, respectively. Rallies in rate-sensitive growth stocks helped the Nasdaq Composite cling to a gain of 0.63 per cent.
Investors took profits from a strong start to the year ahead of a panel discussion in Sweden tonight involving Federal Reserve Chair Jerome Powell. Traders fear Powell may use the platform to douse talk of a slowdown in interest rate increases.
The Fed chief’s colleagues Mary Daly and Raphael Bostic gave a taster of the likely tone of his remarks by warning rates will head above 5 per cent for some time. Inflation data on Thursday and the start of a new corporate reporting season on Friday also loom as potential spoilers to last week’s party mood.
The S&P 500 has risen almost 1.4 per cent across the first five sessions of 2023, a sign of further gains in the next 12 months, according to an old Wall Street adage. The US benchmark has risen 83 per cent of years when it was ahead after five days of trade.
The ASX 200 was ahead around 1.6 per cent for the year at yesterday’s close, the fifth session of 2023. Investors have been encouraged by China reopening its borders to the world after giving on a Covid policy that put health issues and social cohesion above economic growth.
Optimism about improved demand for Australian raw materials helped lift the dollar above 69 US cents overnight for the first time since September. The Aussie was this morning ahead 0.2 per cent at 69.23 US cents.
Consumer confidence rebounded from depressed levels last week as Australians became less concerned about inflation. The ANZ-Roy Morgan confidence index climbed 4.9 points to 87.4, the highest level since late September. Inflation expectations declined a sharp nine-tenths of a percentage point to 5 per cent.
Going up
Resource stocks provided some of the morning’s best performers. Lake Resources firmed 5.45 per cent, South32 1.47 per cent and Novonix 1.21 per cent.
Healthcare companies also featured near the top. ResMed gained 1.43 per cent. Pro Medicus tacked on 1.25 per cent. Healius added 0.81 per cent.
Recce Pharmaceuticals jumped 3.08 per cent after gaining an Australian patent for its anti-virus agent. The Australian Patent Office issued notification of intent to grant a patent for Recce’s 327 and 529 formulations.
Defensive assets were back in favour, bucking this year’s shift towards growth. Domino’s Pizza added 1.69 per cent, Carsales,com 1.58 per cent and The Lottery Corporation 1.62 per cent. Breville Group tacked on 1.51 per cent.
James Hardie was the pick of the ASX 20 index of heavyweights for a second day, rising 1.83 per cent. ANZ edged up 0.67 per cent, Goodman Group 0.39 per cent and Westpac 0.34 per cent.
Going down
The S&P/ASX index of gold stocks backed off its highest level since May despite last night’s eight-month high for the yellow metal. De Grey reversed 5.4 per cent, West African Resources 3.31 per cent and Ramelius 2.33 per cent.
Newcrest dropped 2.24 per cent. Other heavyweight drags included Transurban -0.94 per cent, CSL -0.94 per cent and Woolworths -0.65 per cent.
Coal miners were mixed as warm winter conditions in the northern hemisphere weighed on prices. Coal prices in parts of the US plunged up to 45 per cent last week as an unseasonably mild January undermined demand.
Benchmark prices in Australia have fallen 6.6 per cent since the start of the year, according to Bloomberg. Newcastle coal for February delivery fell 1.21 per cent yesterday.
Whitehaven gave up 0.44 per cent. Coronado shed 1.2 per cent. New Hope swung to a gain of 0.4 per cent,
Retail group Premier Investments lost 4.47 per cent as its shares traded without the right to the latest dividend.
Other markets
A broadly positive session on Asian markets saw the Asia Dow gain 0.19 per cent and Hong Kong’s Hang Seng dip 0.08 per cent. China’s Shanghai Composite advanced 0.65 per cent. Japan’s Nikkei put on 0.81 per cent as trade resumed after yesterday’s public holiday.
S&P 500 futures retreated six points or 0.15 per cent.
Brent crude was broadly steady at US$79.64 a barrel, down a cent.
Gold hovered near an eight-month high. The yellow metal was lately ahead 20 US cents or 0.01 per cent at US$1,878 an ounce.
