Australian shares on track for third day of losses

Derek Rose | May 24, 2023

The local share market is heading for its third straight day of losses amid the stalemate in US debt ceiling talks.

At noon AEST on Wednesday, the benchmark S&P/ASX200 was down 34.6 points, or 0.48 per cent, to a four-day low of 7,225.3.

The broader All Ordinaries was down 37.9 points, or 0.51 per cent, to 7,409.5.

Corpay APAC currency strategist Peter Dragicevich wrote in a note that markets were getting skittish as negotiations between US House Speaker Kevin McCarthy and President Joe Biden continued with no sign of an imminent resolution. 

The US is expected to run out of statutory authority to pay its bills on or around June 1, what’s being referred to as the x-date.

“The longer the negotiations drag out and the closer the ‘x-date’ becomes, the higher anxiety levels (and volatility) are likely to go, and this is typically a negative for risk assets and currencies,” Mr Dragicevich wrote.

Also overnight, Purchasing Managers Index data released overnight showed manufacturing activity down in the US and United Kingdom, while service activity remained robust.

Across the ditch, the Reserve Bank of New Zealand at midday lifted the country’s official cash rate by 25 basis points to 5.5 per cent, as was generally expected.

The RBNZ was one of the most hawkish central banks, so is being closely watched when it might end its rate-tightening cycle.

The forecast it released on Wednesday predicts rates peaking at 5.5 per cent and cuts beginning late next year.

At midday most of the ASX’s sectors were lower, with materials the biggest loser, down 0.9 per cent.

BHP had fallen 1.1 per cent to $43.30, Fortescue had dropped 1.9 per cent to $20.065, and Rio Tinto was down 1.6 per cent to $107.59.

Goldminers were mixed as the price of the precious metal hovered around $US1,975 an ounce.

Newcrest was up 0.5 per cent, but Evolution had dipped 0.3 per cent and Northern Star was down 0.8 per cent.

Three of the four big banks were lower, with NAB down 0.5 per cent and ANZ and Westpac both down 0.4 per cent. CBA was the outlier, flat at $99.445.

Webjet was up 4.7 per cent to $7.64 after the travel platform announced it had swung from a $15m loss last fiscal year to a $134.8m operating profit for 2022/23. 

Managing director John Guscic said a key driver of the results had been the outstanding performance of its WebBeds business, a global marketplace for the travel business.

“WebBeds is now selling more product to customers and is more profitable than it ever has been – and this is just the beginning,” he said.

Universal Store Holdings had plunged 27.5 per cent to $3 after the youth casual apparel retailer, which owns the THRILLS and Worship brands, said it was on track to deliver record full-year sales growth but trading conditions had deteriorated in April and May.

There were “increasingly clear signs that the youth customer is seeing pressures on their discretionary spending levels,” the Queensland-based company said.