ASX closes flat as miners slip on China worries

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket lost much of its early momentum to finish the day flat, weighed down by energy and mining giants and investors still miffed by the lack of any big bang stimulus measures out of China.

The S&P/ASX 200 index closed 10.5 points or 0.1 per cent higher to 8187.4, giving up its morning gains as China’s benchmark CSI 300 Index tumbled at the open, its biggest fall since 2020. On Tuesday, China’s economic planning agency outlined details of measures aimed at boosting the economy, but it refrained from major spending initiatives.

Wall Street rose, helped by falling oil prices.Credit: AP

The lifters

Despite the losses in the broader energy sector, Strike Energy was the best performer of the day, rising 4.4 per cent. Afterpay owner Block also lifted 4.4 per cent, and Pro Medicus closed 4 per cent higher.

Communication services and tech players were the best performing sectors (both up 1.4 per cent). Financial stocks also lifted modestly, with Commonwealth Bank and National Australia Bank shares rising 0.5 per cent and Westpac and ANZ both up 0.4 per cent.

The laggards

Energy stocks extended their losses after a retreat in the oil price, with Woodside down 3 per cent, Santos down 1.8 per cent and Yancoal down 2.6 per cent.

The iron ore miners fell deeper into the red: BHP lost 1.2 per cent and Fortescue Metals Group down 1.6 per cent. The iron ore price was lower, trading at $US105.15 per tonne on Singapore’s exchange.

Across the ditch, the Reserve Bank of New Zealand on Wednesday cut interest rates by half a percentage point, as expected, taking Kiwi rates from 5.25 per cent to 4.75 per cent.

The lowdown

After telling the market two days ago that it had made a play for Arcadium Lithium, Rio Tinto confirmed after the market closed that it would be acquiring the lithium chemicals producer.

Rio Tinto CEO Jakob Stausholm said the acquisition was a significant step in Rio’s long-term strategy.

“Arcadium Lithium is an outstanding business today and we will bring our scale, development capabilities and financial strength to realise the full potential of its Tier 1 portfolio,” said Stausholm in a statement to the ASX.

Arcadium’s CHESS depositary interest (CDI) finished 0.5 per cent lower.

On an economic note, modelling from Moody’s Ratings found that if the US increased tariffs and tightened scrutiny of China-related trade and foreign direct investment following the November elections, Asia-Pacific economies would see their GDP fall below baseline.

“Economic losses would be highest under a blanket trade tariff scenario as the measures affect all US goods imports,” wrote Moody’s analysts in a note. “Economic losses from sector-specific barriers would be smaller as the effects would be limited to certain pockets of industries, and the potential spillovers to supporting sectors depend on country-specific industrial structures.”

On Tuesday, US stocks rebounded, as a rally in big technology companies’ shares and falling oil prices released some of the pressure that built up on the market.

The S&P 500 rallied 1 per cent to claw back all of its loss from the day before. The Dow Jones Industrial Average rose 126 points, or 0.3 per cent, and likewise neared its record set last week, while the Nasdaq composite led the way with a 1.4 per cent rally.

Wall Street has held firm even though stock markets around the world sank following scary swings in China, as euphoria about possible stimulus for the world’s second-largest economy gave way to disappointment. Stocks tumbled 9.4 per cent in Hong Kong for their worst day since the 2008 global financial crisis.

Investors were looking ahead to US earnings season and there was a good backdrop for markets to move higher despite the stormy clouds, Moomoo market strategist Jessica Amir said.

The 10-year Treasury yield was holding steady at 4.03 per cent, where it was late Monday. The two-year yield, which more closely tracks expectations for what the Federal Reserve will do with overnight interest rates, slipped to 3.97 per cent from 3.99 per cent late on Monday, though it’s still near its highest level since August.

When Treasury bonds are paying higher yields, investors generally become less willing to pay very high prices for stocks and other investments. And Treasury yields had been storming higher over the last week following a suite of reports showing the US economy remains healthier than expected.

Such reports, including one last week showing stronger hiring by US employers than forecast, raise hopes that the economy will avoid a recession. But they also force traders to ratchet back expectations of by how much the Federal Reserve will cut interest rates, now that it has widened its focus to include keeping the economy humming instead of just fighting high inflation.

Traders have abandoned expectations for the Fed to cut its main interest rate by a larger than usual half of a percentage point at its next meeting, for example.

On the losing end of Wall Street were oil-and-gas companies, which gave back some of their big recent gains driven by the jump in crude prices. Chevron fell 1.6 per cent and was one of the main reasons the Dow lagged other indexes.

Tweet of the day

Quote of the day

‘I’ll miss the Radio National audience enormously. There’s something magical about waking up when the country is asleep to bring the big news and conversations to the country.’

That’s Patricia Karvelas about her departing Radio National’s Breakfast, in the first major change to come as a result of an ongoing review into the ABC radio show, which has endured a steady decline in audience.

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With AAP, Bloomberg and Associated Press

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