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The share market gave back yesterday’s gains as a plunge in US index futures overshadowed unexpectedly strong jobs data.
The S&P/ASX 200 extended its fall to 60 points or 1 per cent mid-session as S&P 500 index futures slumped almost 1 per cent, hinting at further weakness tonight following the US benchmark’s 0.46 per cent overnight decline.
Back home, the unemployment rate declined to 6.8 per cent last month from 7.5 per cent in July, defying expectations for an increase.
What’s driving the market
The market opened under pressure from a late dive on Wall Street that extended into after-market trade in index futures. S&P 500 index futures fell 31 points or 0.9 per cent this morning and Nasdaq futures 123 points or 1.1 per cent. The declines came after the Federal Reserve warned of low interest rates for years to come amid an uncertain path out of recession.
A brief bounce after the August jobs report gave way to further weakness as a bump in the dollar faded. The Aussie jumped around a third of a cent to 73.09 US cents before slumping back to 72.76 cents in recent action.
Seasonally-adjusted employment increased by 111,000 people last month, according to data from the Australian Bureau of Statistics. The shock rise confounded economists, who had predicted a decline of 35 – 40,000 jobs and an increase in the jobless rate from 7.5 per cent to 7.7 per cent.
The market ignored Victoria‘s lowest case numbers in three months. The state government announced 28 new cases. The 14-day rolling average – a key measure for the government’s roadmap out of lockdown – declined to 44.4.
Going up
Energy stocks bucked the early downtrend, but never threatened to match a 4 per cent surge in the US energy sector. Santos gained 2.2 per cent, Cooper Energy 1.5 per cent and Woodside 0.1 per cent.
Real estate investment trusts was the only other sector to fight the trend, rising 0.3 per cent as Scentre Group put on 2 per cent, Vicinity Centres 1.8 per cent and Dexus 1.6 per cent.
Potential recovery plays also saw shallow gains. Seven West Media put on 4.6 per cent, Domain Holdings 0.8 per cent and Credit Corp 0.2 per cent.
Going down
The local tech sector had nowhere to go but down after Big Tech led the US retreat. The Nasdaq shed 1.25 per cent in an ominous resumption of last week’s trend. Here, Afterpay slid 4.2 per cent, Nearmap 3.9 per cent, EML Payments 3.3 per cent and Megaport 2.8 per cent.
The heavyweight miners were the biggest drag on the index after a sharp retreat in the price of iron ore on concerns over the outlook for Chinese demand. Fortescue Metals slid 5.8 per cent to a seven-week low. Rio Tinto shed 3.1 per cent and BHP 1.2 per cent.
The banks were mixed for a second day. NAB gained 0.8 per cent and Westpac 0.7 per cent. CBA gave up 0.8 per cent and ANZ 0.5 per cent. Health giant CSL faded 1.3 per cent.
Shopping centre operator Unibail-Rodamco-Westfield sagged 4 per cent after announcing plans to “reset” by raising 3.5 billion euros, reducing dividends, selling assets and streamlining operations. The 9 billion euro plan came as foot traffic at its European and US malls showed signs of recovery but remained well below last year’s figures.
Other markets
Asian markets retreated with US index futures. China’s Shanghai Composite fell 0.6 per cent, Hong Kong’s Hang Seng 1.2 per cent and Japan’s Nikkei 0.7 per cent.
Oil gave back a fraction of last night’s 4.2 per cent jump. Brent crude eased 14 cents or 0.3 per cent to $US42.08 a barrel. Gold faded $16.10 or 0.8 per cent to $US1,954.40 an ounce.
What’s hot today and what’s not
Hot today: Another day, another speculative bolter, another ASX-enforced trading halt. The exchange has been playing whack-a-mole all week amid a flurry of extreme rallies in otherwise thinly-traded companies. Momentum traders have been having a field day. Admiralty Resources (ASX:ADY) lasted just 15 minutes before the ASX paused trade pending an explanation for a 257 per cent price surge. The rally continued after the company said it had no idea what was going on. The share price was last up 414 per cent. Jupiter Energy (ASX:JPR) returned to the boards this morning and tumbled 43.2 per cent after clarifying an operations update on Tuesday that sent its shares up more than 700 per cent. East Energy Resources (ASX:EER) and Sagalio Energy (ASX:SAN) remained in halts pending explanations for yesterday’s runs of 1,100 and 987 per cent, respectively.
Not today: City Chic Collective (ASX:CCX) sank to an 11-week low after the fashion retailer lost a bidding war for the eCommerce assets of failed US retail chain Catherines. The company had raised an $80 million war-chest for the court-run auction, but baulked at the final asking price of US$40.8 million ($55.5 million). CEO and MD Phil Ryan said, “Although it was disappointing not to win the assets at auction, we have very good understanding of the… value of the assets, and we did not want to overpay.” The share price slumped to its lowest level since July 3 before trimming its loss to 6.8 per cent.
