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A collapse in iron ore prices and declines on Wall Street drove the share market towards its worst weekly loss in six months.  

The S&P/ASX 200 fell for a fourth day, declining 30 points or 0.4 per cent to a two-and-a-half-week low. At the halfway mark, the index was off 157 points or 2 per cent for the week, its worst performance since a 193-point slide in late January.

BHP dived almost 7 per cent to a five-month low. Fellow bulk metal miners Rio Tinto and Fortescue Metals shed more than 4 per cent.

Newcrest, Star Entertainment and NRW rallied after reporting earnings. Origin Energy, South32 and Treasury Wine Estates declined.

What’s driving the market

A sobering week for Australian investors continued after Wall Street weakened, key commodities fell to multi-month lows, and local Covid cases hit fresh highs in Victoria and NSW. Unexpectedly strong employment data provided a rare piece of positive news. The index has not fallen for four straight sessions all year.

US stocks suffered their biggest setback in a month after the minutes from the latest Federal Reserve meeting showed policymakers leaning towards reducing support for the economy this year. The S&P 500 and Dow both dropped almost 1.1 per cent.

“US equities… traded sideways into the Minutes at levels little changed from Tuesday’s close, only to dip out of the Minutes and then fall away quite sharply in the last ‘hour of power’ with the S&P 500 finishing the day 1.1% lower,” NAB Head of FX Strategy Ray Attrill said.

The Australian materials sector fell 3.8 per cent to its lowest since late June after iron ore, oil and copper touched multi-month lows. Iron ore prices have fallen by almost a third in five weeks. The spot price for ore landed at Tianjin dropped US$6.45 or 4 per cent yesterday to US$153.05 a tonne. Copper declined to its lowest in around two months.

BHP was the biggest drag on the index for a second day. The Big Australian slid 6.86 per cent as markets continued to adjust to this week’s proposed structural change and pivot in direction. Fortescue Metals shed 5.45 per cent, Rio Tinto 4.84 per cent and Champion Iron 3.59 per cent.

The day’s Covid-19 case numbers did little to improve the mood. Victoria reported 57 new local cases, the highest of the current outbreak. New South Wales reported 681 cases, also a record.

The labour market defied expectations of a downturn. The unemployment rate fell to 4.6 per cent last month from 4.9 per cent in June as the economy added 2,200 new hires. Economists had predicted a rise to 5 per cent and a loss of around 42,000 jobs.  

Going up

Newcrest was the best of the heavyweights, rising 1.8 per cent after reporting a record full-year profit. The gold miner increased its final dividend 129 per cent to 40 US cents per share after lifting statutory net profit 80 per cent to $1.21 billion.

News of a return to profitability and plans to sell and lease back its flagship Sydney casino lifted The Star Entertainment Group 7.08 per cent. The casino group declared a net profit of $58 million despite the impact of Covid lockdowns. While the Star Sydney remains closed, the group expects the business to rebound quickly when the lockdown is lifted.

“The experience last year has demonstrated how resilient our business is and how quickly customers return when our properties are allowed to open. This gives us great confidence as vaccination levels increase and a return to normality approaches,” Managing Director and CEO Matt Bekier said.

Exchange operator ASX nudged up 1.85 per cent despite a decline in full-year profit as record-low interest rates affected investment returns and buying interest on futures markets. Operating revenue improved 1.4 per cent due to strong growth in listings.

NRW Holdings was the morning’s best performer, surging 14.86 per cent on news the mining contractor’s order book was expected to swell to $4.4 billion. Operating earnings were expected to rebound to $145-$155 million this year from $120.6 million in FY21.

Among other companies reporting, HT & E climbed 7.14 per cent, Redbubble 9.8 per cent, Telix 7.08 per cent, The Reject Shop 8.64 per cent, Iress 0.7 per cent, Evolution Mining 2.53 per cent, IPH 7.01 per cent, humm 4.26 per cent and Beacon Lighting 2.89 per cent.        

Perpetual eased 0.56 per cent, Codan 4.08 per cent and Airtasker 1 per cent.

Select defensive stocks outperformed. Wesfarmers put on 1.21 per cent, CSL 1.92 per cent, Transurban 1.22 per cent and Coles 0.82 per cent.

Nickel miner Western Areas jumped 12.1 per cent after confirming takeover interest from rival IGO. Shares in IGO fell 5.26 per cent.

Chorus soared 13.99 per cent after the Commerce Commission valued the Kiwi telecom infrastructure specialist’s fibre network at $5.427 billion.

Going down

Treasury Wine Estates fell 1.58 per cent after warning growth in its retail and e-commerce markets had moderated. The wine-maker’s full-year earnings were broadly steady at $510.3 million as other markets made up for the loss of Chinese trade. Net profit improved 1.8 per cent to $250 million.

South32 declined 0.69 per cent after reporting a US$195 million statutory loss. The result was driven by a US$764 million impairment charge relating to a rejected application to expand its Illawarra coal operation. Underlying earnings improved 153 per cent to US$489 million. The miner will pay a final dividend of 3.5 US cents per share and a special dividend of 2 cents per share.

Origin Energy fell more than 5 per cent before trimming its loss to 2.4 per cent after reporting a full-year statutory loss of $2.291 billion. Underlying profit collapsed to $318 million from $1.023 billion as prices contracted and Covid undermined business demand.  

Companies trading without the right to a dividend included QBE -0.83 per cent, GPT -2.97 per cent and GUD -2.93 per cent.  

Other markets

Asian markets logged solid declines. The Asia Dow lost 1.35 per cent, China’s Shanghai Composite 1.12 per cent, Hong Kong’s Hang Seng 1.62 per cent and Japan’s Nikkei 0.66 per cent.

S&P 500 futures receded five points or 0.1 per cent.

Oil plumbed its lowest level since May. Brent crude sagged US$1.05 or 1.54 per cent to US$67.18 a barrel.

A tentative post-Fed rebound in gold faltered. The yellow metal dropped US$1.40 or 0.1 per cent to US$1,783 an ounce.

The dollar added to overnight losses, falling 0.31 per cent to 72.08 US cents.

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