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The share market fell for the first time in four sessions following weak leads from Wall Street, declines in key commodities and earnings misses from Origin Energy and Transurban.
The S&P/ASX 200 declined 22 points or 0.31 per cent to 7107. Eight out of eleven sectors fell. The decline came after the Dow broke a five-session winning run.
Declines in gold, copper and iron ore kept the mining sector under pressure. Energy producers rebounded with crude prices.
What’s driving the market
Buying enthusiasm has cooled in recent days following a strong rebound since mid-June. Benchmarks in the US and Australia have run up against technical resistance this week in the form of their 200-day moving averages.
Overnight, CNBC’s influential “Mad Money” presenter Jim Cramer advised investors to book some profits.
“I don’t want to freak you out. I just think stocks need a cooling-off period after this miraculous run, and we’re getting one for certain,” he said. “And you should take something off the table.”
Cramer listed three reasons: technical indicators suggest markets look overbought in the short term; interest rates are going higher; and the return of “meme stock” madness in the US.
Overnight, the S&P 500 dropped 0.72 per cent after the Federal Reserve warned it had seen little evidence inflationary pressures were easing. Stocks were already under pressure before the announcement. The Dow lost 0.5 per cent.
Back home, the market barely blinked at a near-50 year low in unemployment. The official seasonally-adjusted jobless rate fell to 3.4 per cent last month from 3.5 per cent in June despite a drop in total employment of 41,000.
“The fall in unemployment in July reflects an increasingly tight labour market, including high job vacancies and ongoing labour shortages, resulting in the lowest unemployment rate since August 1974,” Bjorn Jarvis, head of labour statistics at the ABS, said.
“In July, there were fewer unemployed people (474,000) than there were job vacancies (480,000 in May).”
Going up
Intellectual property services group IPH surged 13.12 per cent to a two-and-a-half-year high after snapping up Canada’s leading IP firm. IPH will acquire Smart & Biggar for $387 million. The firm also reported a modest dip in full-year net profit to $52.6 million from $53.6 million in FY21.
Trading software-maker Iress firmed 3.87 per cent upon reporting a 29 per cent improvement in underlying half-year profit. Revenues increased 6 per cent.
Penfolds owner Treasury Wine Estates rallied 2.45 per cent with supply chain optimisation measures expected to offset inflationary pressures and cost increases this fiscal year. The winemaker plans to raise prices for its premium and luxury brands.
Energy stocks rose after Brent crude rallied for the first time in four sessions. Santos firmed 3.33 per cent. Woodside Energy gained 2.11 per cent.
Healthcare and consumer staples were the other sectors to rise. CSL continued to recover from yesterday’s full-year result, gaining 1.99 per cent. Coles tacked on 0.88 per cent. Woolworths inched up 0.15 per cent.
Coal was another pocket of strength. Whitehaven put on 2.36 per cent, New Hope 3.28 per cent and Coronado 1.17 per cent.
A 10.7 per cent improvement in full-year net profit helped Medibank hold its ground. The private health insurer will pay a full-ranked final dividend of 7.3 cents per share.
Going down
Transurban slumped 3.34 per cent after reporting a dip in traffic volumes. Average daily traffic across the roll road operator’s portfolio declined 0.5 per cent in FY22. The firm flagged an expected increase in costs this fiscal year.
Origin Energy slid 2.72 per cent after reporting a statutory loss of $1.429 billion and declining to offer guidance for the current fiscal year. The company expects underlying earnings to improve, but said there was “uncertainty around the range of potential earnings outcomes for FY2023”.
Regis Resources fell 7.95 per cent after flagging revisions to the cost assumptions underpinning valuations of gold stockpiles. The miner expects to report a full-year statutory net profit after tax of $10-$20 million when it releases earnings on August 25.
Blackmores dropped 10.1 per cent as inflationary pressures, supply-chain issues and Chinese lockdowns clouded its outlook. The vitamins manufacturer increased underlying profit by 22.6 per cent last fiscal year to $31.1 million.
Codan dropped 5.78 per cent as a record underlying net profit was overshadowed by news the metal detection and communications firm will rely on a strong second half in FY23 amid “challenging” conditions. Minelab sales this half “may not” reach FY22 levels.
Nuix shed 2.82 per cent after full-year earnings collapsed 82 per cent. Telix Pharmaceuticals dropped 3.03 per cent as its full-year loss blew out to $70.9 million.
Other drags included gold miner Newcrest -2.91 per cent, iron ore miner Fortescue Metals -2 per cent and ANZ Bank -1.17 per cent.
Other markets
Asian markets saw red. The Asia Dow dropped 0.3 per cent, China’s Shanghai Composite 0.48 per cent, Hong Kong’s Hang Seng 0.63 per cent and Japan’s Nikkei 0.85 per cent.
US futures continued last night’s retreat. S&P 500 futures drifted down four points or 0.1 per cent.
Oil trimmed last night’s 1.4 per cent bounce. Brent crude reversed 11 US cents or 0.1 per cent to US$93.54 a barrel.
Gold recouped US$2.10 or 0.1 per cent at US$1,778.80 an ounce.
The dollar was broadly steady at 69.29 US cents after tumbling more than 1 per cent overnight.
