ASX weighed down by utilities, miners and tech stocks

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

The numbers

The Australian sharemarket drifted lower on Wednesday, with most sectors trading in the red or flat. The lacklustre session followed a mixed finish on Wall Street ahead of a key US inflation report and the Federal Reserve’s latest interest rate policy decision.

The S&P/ASX 200 Index slid 39.9 points, or 0.5 per cent, to 7,715.5 as all industry sectors bar energy slid lower, with iron ore heavyweights Fortescue (down 1.3 per cent), Rio Tinto (down 1.5 per cent) and BHP (down 0.5 per cent) declining for a second day. The losses come after a sharp drop in the iron ore price overnight, tracking concerns over demand for the commodity in China.

Wall Street was mixed on Tuesday.Credit: Reuters

The lifters

Healius was the best performer of the day, gaining 8.6 per cent, followed by Emerald Resources (up 6.1 per cent) and Liontown Resources (up 5.1 per cent).

Energy companies (up 1.1 per cent) didn’t gain enough to offset the wider market’s sea of red, with Woodside rising 2.6 per cent and Santos eking out gains of 0.3 per cent.

The laggards

Utilities, IT firms, healthcare, consumer discretionary and industrials stocks all fell by more than 0.8 per cent each, dragging down the bourse.

IT firms (down 1 per cent) and utilities (down 1.1 per cent) were poor performers, with WiseTech (down 2.7 per cent) and Meridian Energy (down 0.5 per cent) both trading lower.

Toll roads operator Atlas Arteria (down 4.4 per cent) was the biggest large-cap decliner, followed by Mineral Resources (down 3.6 per cent).

On the flipside, JB Hi-Fi (up 1.9 per cent), Pro Medicus (up 1.6 per cent) and James Hardie Industries (up 1.6 per cent) were among the biggest large-cap advancers.

Super Retail Group slipped 0.2 per cent after the announcement that board member and Fonterra executive Judith Swales will chair its board after its AGM in October, replacing Sally Pitkins.

The lowdown

Capital.com senior market financial analyst Kyle Rodda said markets would be cautious going into a “double whammy” of key economic events, with the release of US inflation data and the Federal Reserve’s latest interest rate decision tonight.

“The ASX200 remains under pressure because of softer commodity prices. The materials sector remains the biggest drag, although a lift in Woodside Energy courtesy of a broker upgrade supported the energy sector,” he wrote in a note to clients.

“The drop in yields in US trade manifested in lower Aussie bond yields, but the move didn’t have a comparable impact on equity valuations, especially those interest rate-sensitive sectors that drove Wall Street to new all-time highs.”

Overnight, Wall Street’s benchmark indexes drifted to a mixed close, but the S&P 500 and Nasdaq composite still managed to notch more records.

The S&P 500 rose 0.3 per cent, driven largely by gains in tech stocks, even though more stocks fell than rose within the index. The tech-heavy Nasdaq composite rose 0.9 per cent. Both indexes set record highs for the second straight day. The Dow Jones slipped 0.3 per cent.

The key events for the market this week come on Wednesday US time with the latest update on inflation at the consumer level and the Federal Reserve interest rate decision. The US will also release its latest update on prices at the wholesale level on Thursday.

Wall Street expects the government’s consumer price index to remain unchanged at 3.4 per cent in May. Inflation as measured by CPI is down sharply from its peak at 9.1 per cent in 2022, but it has seemingly stalled around 3 per cent. That has complicated the Fed’s goal of taming inflation back to its target rate of 2 per cent.

The Fed has held its main interest rate at its highest level in more than two decades and Wall Street is hoping for one or two cuts to that rate this year. Virtually no one expects the Fed to move its main interest rate at its current two-day meeting, which started on Tuesday. Policymakers will be publishing their latest forecasts on Wednesday for where they see interest rates and the economy heading.

Data on the US economy have come in mixed recently, and traders are hoping for a slowdown that stops short of a recession and is just right in magnitude. A cooldown would put less upward pressure on inflation, which could encourage the Fed to cut rates. Lower interest rates could fuel more growth for the broader stock market. Major indexes have been rallying to records, though, despite worries about sticky inflation and high interest rates.

Treasury yields fell in the bond market. The yield on the 10-year Treasury slipped to 4.40 per cent from 4.47 per cent late Monday.

Tweet of the day

Quote of the day

“It has come to our attention that you received a significant overpayment in error in January 2023. We would be grateful if you could arrange the repayment to us [using the account details below] at your earliest convenience.”

That’s the Asia Pacific human resources department of X, formerly Twitter, which is threatening to take some former Australian employees to court, demanding they return entitlements it claims were overpaid to them after it bungled the currency conversion from US to Australian dollars on the payments.

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With AP

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