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Miners steered the share market into the red after a growth warning from China’s premier helped push iron ore prices sharply lower.

The S&P/ASX 200 flipped a 26-point opening rally into a mid-session loss of 27 points or 0.38 per cent.

The mining sector retreated as ore and gold prices fell and stubborn Covid infection rates kept alive the threat of a Shanghai-style lockdown in Beijing. Tech stocks bounced after a takeover offer for data sourcing firm Appen.

What’s driving the market

A tech-fuelled opening rally rolled over as the heavyweight mining sector sold off. Chinese Premier Li Keqiang told officials the government’s aim this quarter was to record positive growth – a far less ambitious goal than the official 5.5 per cent growth target.

“We will try to make sure the economy grows in the second quarter,” said Li, according to a transcript quoted by the Financial Times. “This is not a high target and a far cry from our 5.5 per cent goal.”

China’s economy has stalled as the nation pursues a zero-Covid strategy. Shanghai is only just emerging from a two-month lockdown. Beijing this morning reported 45 new cases, down from 47 yesterday but still too high to lift work-from-home orders.

Hong Kong’s Hang Seng fell 0.68 per cent. China’s Shanghai Composite trimmed a solid opening loss to 0.1 per cent. The Asia Dow dipped 0.11 per cent. Japan’s Nikkei shed 0.03 per cent.

Iron ore prices on China’s Dalian Commodity Exchange slumped 4.5 per cent this morning before paring their fall to 3 per cent. The commodities-sensitive Australian dollar dropped as low as 70.8 US cents before bouncing to 70.95 cents.

The I.T. sector jumped after Canada’s Telus International launched an opportunistic $1.2 billion bid for tech darling Appen. The unsolicited, conditional and non-binding indicative proposal at $9.50 a share represented a 48 per cent premium to yesterday’s closing price. Nonetheless, the board of the Australian artificial intelligence global leader said Telus would have to do better.

“The Board is in discussions with Telus to seek an improvement in the terms of the Indicative Proposal,” the company said.

Appen’s shares jumped 30.78 per cent to $8.37, but its current market valuation is a shadow of its pandemic-era peak. The share price hit $43.66 in August 2020. Stock was available yesterday at $6.39.

The scale of Appen’s decline is not untypical in this year’s worst-performing sector. At this month’s low, tech had fallen 44 per cent from its August 2021 peak.

Tech was among the strongest sectors overnight in the US after the Federal Reserve clarified this year’s rates outlook. The Nasdaq Composite rallied 1.51 per cent. The broader S&P 500 gained 0.95 per cent.

US stocks kicked higher on signs the Fed intends to raise its benchmark rate in 50 basis point jumps for the next few meetings, but may pause as soon as September if inflation falls fast enough. Data this month suggested higher rates were already cooling the economy.

“If we hear a growing chorus of… members mentioning a potential pause around September, we know the Fed are getting cold feet. And who could blame them, with consumer confidence at multi-year lows and cracks appearing in the rendering of the housing sector,” City Index senior market analyst Matt Simpson said.

Going up

The morning’s biggest gains were all growth stocks as the Appen takeover encouraged value-hunters to re-examine other fallen angels.

Tyro Payments gained 5.05 per cent, City Chic Collective 4.61 per cent and PointsBet 4.62 per cent. Codan added 3.59 per cent, Zip Co 2.96 per cent and WiseTech 2.95 per cent.

Westpac put on 1.21 per cent after transferring the management of its superannuation funds to global professional services provider Mercer. The switch is part of the bank’s drive to simplify its operations and refocus on banking.

ANZ clung to a gain of 0.39 per cent. NAB added 0.44 per cent. CBA shares dipped 0.19 per cent.

A broker upgrade helped lift testing and certification business ALS 4.04 per cent. Morgan Financial raised its recommendation to ‘Add’ following yesterday’s trading update.

Going down

Miners retreated on the threat of lower demand as China’s economy cools. Whitehaven Coal sank 5.2 per cent. Fortescue Metals shed 3 per cent, Rio Tinto 1.99 per cent and BHP 1.44 per cent.

Coal miner New Hope declined 8.29 per cent from a two-year high after unseasonal rain and Covid absences affected production in the NSW Hunter Valley.

Champion Iron eased 1.8 per cent during a tough morning for miners after reporting a 77 per cent increase in earnings per share last quarter.

Supermarkets Woolworths and Coles were back under pressure following a brief respite yesterday. Woolworths dropped 1.63 per cent and Coles 1.67 per cent. Retail stocks have struggled since weak outlooks from US giants Target and Walmart underscored the cost pressures facing retailers.

Other markets

A weak after-hours earning update from Nvidia and falls on Asian markets kept US futures in check. S&P 500 futures were recently up a quarter of a point or 0.01 per cent.

Oil continued to edge higher on signs sanctions on Iranian oil will remain as nuclear negotiations with the US stutter. Brent crude firmed 20 US cents or 0.2 per cent to US$111.32 a barrel.

Gold edged up US$2.70 or 0.15 per cent to US$1,849 an ounce.

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