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The share market slid towards back-to-back losses for the first time in more than two weeks as long-term interest rates hit a two-and-a-half year high and earnings misses from Apple and Amazon dragged on US futures.
The S&P/ASX 200 declined 52 points or 0.7 per cent by mid-session. The fall pushed the market towards its first weekly decline of an otherwise positive month.
Gains in CSL, ResMed and Afterpay were outweighed by retreats in the banks and miners.
What’s driving the market
Positive leads from the US were quickly overshadowed by sharp declines this morning in two of the market’s largest companies. Apple and Amazon.com slumped in extended trade following poorly-received quarterly updates lodged after the end of regular trade.
“Apple and Amazon failed to impress investors with their third-quarter report cards,” Kalkine Group CEO Kunal Sawhney said. “While Amazon missed revenue and earnings expectations, Apple’s revenue fell short of forecasts amid larger-than-anticipated supply constraints.”
Apple, the US’s largest company by market capitalisation, fell 3.53 per cent after iPhone sales fell short of analysts’ expectations. Amazon shed 4.05 per cent following its biggest profit decline in four years. Both companies cited supply-chain problems as factors.
“Our operations are normally well staffed and optimised to be in stock and to deliver to customers in one to two days,” Amazon Chief Financial Officer Brian Olsavsky said. “Labour shortages and supply chain disruptions upset this balance and resulted in additional costs to ensure that we continue to maintain our service levels to customers.”
Nasdaq futures dived 110 points or 0.7 per cent. S&P 500 futures fell 17 points or almost 0.4 per cent.
This morning’s retrace took the shine off a strong night in the US. The Nasdaq Composite surged 1.39 per cent to an all-time high. The Dow gained 0.68 per cent and the S&P 500 0.98 per cent.
Also dampening buying enthusiasm was a surge in long-term interest rates to their highest in two and a half years. The yield on ten-year Australian government bonds jumped almost eight basis points to 1.937 per cent, a level last seen in April 2019.
The rise came as reports on producer prices, retail sales and private-sector credit all came in stronger than expected, underlying the strength of the economy. The Reserve Bank declined to defend its yield target. ANZ said it expects the bank to abandon the concept next week after yields flew far beyond the bank’s stated target.
Going up
A 20 per cent jump in Q1 revenue propelled ResMed 4.6 per cent to a one-month high. The digital health firm’s revenues rose to $904 million from $751.9 million in the prior corresponding period. Net income and diluted earnings per share grew by 14 per cent.
Car parts and swimming pool manufacturer GUD jumped 6.75 per cent after extending its footprint in lighting. The company will acquire global specialist lighting business Vision X for US$52.8 million.
Macquarie Group entered a trading halt after announcing a $1.5 billion capital raising to “invest in new opportunities”. The investment bank’s shares were near record levels in anticipation of a strong first-half result. The bank this morning reported net profit more than doubled to $2.043 billion.
Seven West Media climbed 6.63 per cent after refinancing its debt facility. Plumbing retailer Reece rallied 6.85 per cent a day after reporting a 13 per cent rise in quarterly sales.
Afterpay and CSL were the only stocks on the elite ASX 20 to advance, rising 1.25 and 1.05 per cent, respectively.
Going down
Crown Resorts fell 1.19 per cent after settling a class action over alleged corporate governance failures when staff in China were charged with breaches of local gaming laws. The casino group will pay claimants $125 million without admission of liability.
Vulcan Energy dived 14.68 per cent as trade resumed following a scathing attack by shortseller fund J Capital. The activist fund accused the lithium hopeful of exaggerating its prospects. Vulcan responded last night with a rebuttal, dismissing J Capital’s claims as “misleading and incorrect”.
Meal kit delivery group Marley Spoon lost almost a third of its market capitalisation after downgrading its full-year guidance. The company cut its growth target to 26-28 per cent from previous guidance of 30-35 per cent, citing “volatile consumer behaviour”. The company had been one of the big winners from pandemic lockdowns. The share price dived 31.46 per cent to a 16-month low.
Origin Energy eased 1.56 per cent as a jump in gas prices helped offset flat production and sales last quarter. Electricity volumes increased 3 per cent, thanks to improved business volumes.
Wagering group PointsBet fell heavily for a second day, down 6.14 per cent following yesterday’s disappointing quarterly. The report showed the company lost market share in the US despite spending heavily on marketing and promotions.
The major banks and miners declined. Rio Tinto shed 2.12 per cent, Newcrest 1.5 per cent and NAB 1.39 per cent. ANZ gave up 0.66 per cent, CBA 1.2 per cent, Westpac 0.95 per cent, Fortescue Metals 0.25 per cent and BHP 0.51 per cent.
Other markets
Asian markets declined. The Asia Dow dropped 0.22 per cent, Hong Kong’s Hang Seng 0.86 per cent, Japan’s Nikkei 0.78 per cent and China’s Shanghai Composite 0.03 per cent.
Oil reversed its overnight loss. Brent crude climbed 28 US cents or 0.33 per cent to US$83.94 a barrel.
Gold eased US$1.90 or 0.1 per cent to US$1,800.70 an ounce.
The dollar firmed 0.05 per cent to 75.35 US cents.
