ASX falls 1.2pct to near three-week low

| August 23, 2022

By Derek Rose in Sydney

The local share market has suffered its worst loss in seven weeks as traders suddenly turn skittish ahead of a major conference of central bankers from around the world.

The benchmark S&P/ASX200 index finished Tuesday on the lows of the day, down 85.1 points, or 1.21 per cent, to a nearly three-week low of 6961.8. The All Ordinaries closed down 88 points, or 1.21 per cent, to 7199.2.

It was the market’s second losing day in a row and worst performance since June 30.

“Obviously, we’ve seen a pretty red day today, following from the US session that we saw last night, both indices were down over two per cent,” ASR Wealth Advisers head of desk Tom Armstrong told AAP.

“That old adage ‘the US sneezes, we catch a cold’ ran through again today, mainly all on fears of rate rises and there’s been a bit of a reversal in sentiment,” he said.

“On top of that, we’re coming towards the end of this summer period in the Northern Hemisphere, people are returning to work and adjusting portfolios, seasonality kind of things … to be honest, I think we’re going to see a bit of a protracted sell-off through for the month of September and October, as we usually do,” Mr Armstrong added.

On fears about the economic situation with Australia’s biggest trading partner, Mr Armstrong said “everything that could go wrong in China at the moment seems to be going wrong”.

As well, uncertainty surrounds what talk will emerge from the Jackson Hole Economic Symposium in Wyoming later in the week – the first in-person meeting of the symposium since before the pandemic.

Federal Reserve chairman Jerome Powell might use the symposium to double down on hawkish rhetoric or instead ease market fears about the pace of interest rate hikes. 

Nine of the ASX’s 11 official sectors closed lower on Tuesday with financials the biggest loser, falling 2.05 per cent.

Macquarie was down 3.4 per cent to $172.57 and ANZ was down 1.7 per cent to $22.45. CBA, NAB and Westpac all fell by 2.0 per cent to $97.02, $29.94 and $21.36 respectively.

In the heavyweight mining sector, BHP added 0.3 per cent to $41.46 while Fortescue dropped 0.3 per cent to $19.04, and Rio Tinto fell by 0.5 per cent to $97.66. 

Pilbara Minerals gained 3.2 per cent to a four-week high of $3.27 after the lithium producer announced its maiden profit of $561.8 million in the 12 months to June 30, compared to a $51.4 million loss the year before.

Sales revenue increased nearly sevenfold to $1.2 billion on strong global demand for lithium raw materials, which are essential for use in electric vehicles and consumer electronics.

South32 dropped 1.4 per cent to $4.12 after announcing it was scrapping its $1 billion plan to extend the mine life of its Dendrobium coal operation west of Wollongong in NSW. BlueScope Steel, which uses the metallurgical coal in its operations, fell 2.1 per cent to $16.78.

Whitehaven Coal gained 2.8 per cent to a fresh all-time high of $7.75, while New Hope Corp added 2.4 per cent to a 10-year high of $5.10.

Woodside added 1.9 per cent to $33.67 as Saudi Arabia warned that OPEC could cut output to correct a recent drop in oil prices. Brent crude was up 0.3 per cent to $US97 a barrel.

Dan Murphy’s and BWS owner Endeavour Group fell 12.3 per cent to $7.25 despite the alcohol retailer delivering a better-than-expected $495 million full-year profit, up 11.3 per cent from the year before.

Altium surged 19.8 per cent to a six-month high of $35.84 on broker upgrades following the electronic design software company announcing late Monday its full-year profit after tax has risen 57 per cent to $US55.5 million.

“They shot the absolute lights out of their report, and it’s good to see them returning to form, to be honest,” Mr Armstrong said.

Scentre Group rose by 2.2 per cent to $2.84 after the Westfield owner announced its half-year operating profit had risen 17.6 per cent to $540.5 million, with occupancy up and rents increasing.

Kogan.com announced a full-year loss of $35.5 million, with founder and chief executive Ruslan Kogan admitting that “we were wrong” by betting that surging e-commerce sales during the pandemic wouldn’t slow down after the lockdowns ended.

The Australian dollar meanwhile was buying 68.60 US cents, from 68.84 US cents at Friday’s close.

ON THE ASX:

* The benchmark S&P/ASX200 index on Tuesday finished down 86.1 points, or 1.21 per cent, at 6961.8.

* The broader All Ordinaries dropped 88 points, or 1.21 per cent, to 7199.2.

AAP