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The share market faces its worst weekly loss since June following a flat morning as creeping Covid lockdowns in China weighed on commodity prices.
The S&P/ASX 200 overcame early weakness to reach mid-session half a point or 0.01 per cent ahead.
Gains in property, banking and healthcare stocks largely offset declines in commodity stocks.
What’s driving the market
A challenging week for investors continued as negative leads from commodity markets overshadowed rebounds in the Dow and S&P 500 overnight. The ASX 200 has fallen 3.6 per cent this week, putting it on course for its worst result since a 6.6 per cent smash-up in mid-June.
US stocks steadied overnight ahead of a government employment report tonight that will have a major impact on how high interest rates rise this month.
The S&P 500 climbed 0.3 per cent to its first gain in five sessions. The Dow added 0.46 per cent. The Nasdaq slid 0.26 per cent to its longest losing run since February.
Miners and energy producers kept ASX gains in check today as Covid restrictions in several Chinese cities muddied the outlook for demand. Iron ore prices fell 4.5 per cent in China this morning. Overnight, aluminium hit a 16-month low. Tin touched levels last seen in 2020.
“Base metals slumped following the news that the megacity of Chengdu would be placed in lockdown. There is also growing concern that Europe’s energy crisis will impact demand. The EU is likely to place restrictions on gas consumption in heavy industry if shortages persist. These demand concerns are outweighing ongoing supply side issues,” ANZ’s senior commodity strategist Daniel Hynes said.
The seemingly unstoppable rise of the greenback is another major headwind for commodities priced in US dollars. Overnight, the US dollar index touched a 20-year high.
That helped pushed the Australian unit below 68 US cents for the first time since mid-July. The Aussie was this morning buying 67.89 US cents.
Global markets are now entering a historically weak month.
“The S&P 500 witnessed its worst month in September 2021 since the pandemic-induced selloff in March 2020,” Kunal Sawhney, CEO of research group Kalkine, said. “For the ASX 200, last September brought an overall monthly 2.7% decline,” he added.
“Factors like big stocks going ex-dividend may play a major role in shaping the direction of equity markets, like what happened with BHP on Thursday. Besides this, macro factors like interest rate hikes and growth concerns will likely keep investors on the sidelines.”
Going up
Financials was the pick of the sectors after touching a five-week low yesterday. Macquarie Group led with a rise of 2.18 per cent. CBA gained 1.19 per cent, ANZ 0.71 per cent, NAB 0.89 per cent and Westpac 0.88 per cent.
Insurers QBE and Suncorp put on 1.97 and 1.76 per cent, respectively.
Real estate investment trusts trimmed a losing week. GPT Group bounced 2.55 per cent, Mirvac 1.46 per cent and Charter Hall Retail 1.36 per cent.
A pause in this week’s rally in bond yields allowed room for recovery for select growth stocks. Life360 popped 6.79 per cent. Clinuvel Pharmaceuticals gained 4.36 per cent.
James Hardie firmed 0.51 per cent after naming Aaron Erter as its new CEO. Erter has been CEO of PLZ Corporation in the US for the last two years.
Fragrance retailer Dusk rallied 6.79 per cent after reporting a 33.2 per cent bounce in sales through the first eight weeks of the new fiscal year. Store closures through the first half of FY22 pulled full-year sales down 6.9 per cent from FY21 to $138.4 million. Earnings declined 31.1 per cent to $26.5 million.
Going down
Resource stocks spearheaded this morning’s retreat. Among the heavyweights, Fortescue Metals fell 2.07 per cent, Rio Tinto 2.6 per cent and BHP 1.79 per cent.
This week’s fierce rally in uranium stocks ran into headwinds overnight. The Global X uranium ETF reversed 4.58 per cent.
Here, Elevate Uranium slid 9.57 per cent, Bannerman Energy 7.42 per cent and Paladin 5.06 per cent.
A six-week low in gold helped pull the S&P/ASX index of gold miners to a fresh four-year nadir. St Barbara shed 3.37 per cent, Sandfire 2.46 per cent and Northern Star 1.95 per cent.
Lawrie Conway was promoted from CFO to CEO and Managing Director of Evolution Mining on a day when the gold miner’s shares hit a five-year low. Shares fell as low as $2.14 and were lately down 1.83 per cent at $2.15.
Lithium miners also felt the heat. Core Lithium slipped 5.35 per cent, Allkem 3.44 per cent and Lake Resources 5.29 per cent.
Among stocks trading ex-dividend, Ampol dropped 4.83 per cent, Mineral Resources 5.73 per cent, Eagers Automotive 1.54 per cent and Coles 0.7 per cent.
Other markets
A broadly negative morning on Asian markets saw the Asia Dow give up 0.4 per cent, Hong Kong’s Hang Seng 0.74 per cent and Japan’s Nikkei 0.24 per cent. China’s Shanghai Composite inched up 0.1 per cent.
US futures drifted lower as the morning advanced. S&P 500 futures were recently down 8.5 points or 0.21 per cent.
Oil clawed back some of last night’s 3.4 per cent loss. Brent crude bounced US$1.10 or 1.2 per cent to US$93.46 a barrel.
Gold hovered near a six-week low. The yellow metal was lately off US$1 or 0.06 per cent at US$1,708.30 an ounce.
