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Australian shares marked time after a poorly-received trading update from US social media giant Snap sharpened doubts about the outlook for corporate earnings as costs increase and the economy slows.

The S&P/ASX 200 struggled to get out of first gear as US equity futures plunged. At the halfway mark, the Australian benchmark was one point or 0.01 per cent in the red.

Advances in the heavyweight banking and materials sectors were offset by declines across the wider market. Nufarm sank more than 13 per cent after a major investor sold its stake. Tabcorp completed a demerger into two listed businesses.

What’s driving the market

Positive overnight leads were quickly superseded by ominous signs for tonight’s US session. S&P 500 futures dived 32 points or 0.8 per cent after Snap told employees it will miss revenue and earnings targets. CEO Evan Spiegel warned of headwinds including inflation, rising rates, labour shortages and supply-chain issues.

The news triggered heavy after-hours selling in social media stocks. Snap tumbled 30.97 per cent, Pinterest 12.13 per cent, Facebook owner Meta Platforms 7.08 per cent and Twitter 3.72 per cent. Nasdaq futures slumped almost 1.4 per cent.

Also depressing ASX buying interest was a round of soft economic data. A measure of Australian private-sector activity fell to a four-month low as manufacturing contracted and services growth slowed. The S&P Flash Australia Composite Output index dropped to 52.5 this month from 55.9 in April. Business confidence sank to a 25-month low.

Consumer confidence rebounded a notch after collapsing 7.7 per cent in four weeks. The ANZ-Roy Morgan weekly gauge ticked up 1.7 per cent.

Bank stocks kept the ASX near break-even, mirroring strength in US financials overnight after JPMorgan Chase raised its full-year guidance. The upgrade appeared to confirm the prospects for lenders to increase margins as interest rates rise. The news helped lift the S&P 500 by 1.86 per cent and the Dow by 1.98 per cent.

Here, NAB climbed 1.66 per cent, CBA 0.9 per cent, ANZ 0.63 per cent and Westpac 0.68 per cent.

Going up

Miners filled most of the slots at the top of the index. Allkem climbed 4.62 per cent, Liontown Resources 4.44 per cent and Mineral Resources 3.97 per cent. Close behind were Pilbara Minerals +3.56 per cent, Perseus +3.03 per cent and IGO +2.92 per cent.

Among the heavyweights, Fortescue Metals gained 1.13 per cent, Rio Tinto 1.04 per cent and BHP 0.38 per cent.

Confirmation earnings will be at the upper end of guidance kept investment manager Challenger near a two-year high. The firm expects full-year normalised net profit to be closer to $480 million than the $430 million lower end of guidance. The share price was lately steady at $7.56.

Tabcorp’s demerged lotteries and Keno business The Lottery Corporation debuted this morning. Shares in the new listed entity traded as low as $4.49 and as high as $4.69 before stabilising around the $4.59 level. Tabcorp shares plunged 81.18 per cent to reflect the adjusted values of each business.

Going down

Nufarm sank 13.44 per cent to $5.05 after a major Japanese shareholder unloaded its stake in the firm. Sumitomo Chemical Company sold 60.2 million shares – around 15.9 per cent of the total shares on issue – in a block trade for $324 million last night.

The sale locked in a substantial loss for the Japanese investor, which bought in at $14 in 2009. Nufarm said the companies intended to continue their 12-year business alliance.

Qantas eased 1.83 per cent after buying a 51 per cent stake in online travel firm TripADeal. The purchase will increase the airline’s exposure to the packaged holiday market. Qantas intends to drive business to TripADeal through its loyalty program.

Technology One shed 1.97 per cent as a 21 per cent jump in expenses took some of the shine off a record first-half profit. The software-as-a-service operator’s after-tax profit increased 18 per cent to $33.2 million.  

Growth stocks were pressured by this morning’s collapse in Nasdaq futures. Afterpay owner Square slid 6.21 per cent, Imugene 4.44 per cent and Zip Co 4.35 per cent.

Other markets

A red morning on Asian markets saw the Asia Dow shed 0.54 per cent, China’s Shanghai Composite 0.26 per cent, Hong Kong’s Hang Seng 1.01 per cent and Japan’s Nikkei 0.5 per cent.

Oil retreated with US equity futures. Brent crude dropped 83 US cents or 0.7 per cent to US$112.66 a barrel.

Gold rose for a fourth session, inching up 60 US cents or 0.03 per cent to US$1,848.40 an ounce.

The dollar slipped back under 71 US cents, lately down 0.19 per cent at 70.72 US cents.

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