ASX slumps as miners weigh on market; government buys Rex debt

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

The numbers

The Australian sharemarket closed lower on Thursday as commodity prices were pushed lower by US President Donald Trump’s announcement that he intends to introduce 10 per cent tariffs on Chinese imports.

The S&P/ASX200 dropped 51.1 points, or 0.6 per cent, to 8378.7 points at the close, with nine of the 11 industry sectors in the red. It comes after the ASX recorded marginal gains of 0.3 per cent on Wednesday.

The Australian dollar was flat, and was valued at US62.73¢ as at 4.31pm.

Australia’s mining giants are weighing on the bourse. Credit: Bloomberg

The lifters

Myer shares surged 6.1 per cent as shareholders voted to merge with Premier Investments’ apparel brands, which include Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E. Shareholders overwhelmingly embraced the deal, with 96.2 per cent of votes cast in favour of the merger. Premier shares fell 0.7 per cent.

The merger will bring Myer’s store footprint to 783, with the additional employees creating a combined workforce of more than 17,000 people. The combined group’s annual sales are projected to exceed $4 billion.

The information technology sector rose for the second day running despite a fall in WiseTech Global shares, which declined by 0.4 per cent. TechnologyOne also slipped (down 0.5 per cent), while accounting software company Xero rose 1.1 per cent.

The laggards

Materials faltered as mining stocks tumbled – the sector was unable to rebound from losses in early trade, slipping to 1.5 per cent at the end of the day. BHP and Rio Tinto dropped 1.7 per cent and 1.4 per cent respectively. Fortescue dropped by 2.2 per cent as the iron ore heavyweight reported quarterly results to investors.

Iluka Resources (down 6.5 per cent) and Liontown Resources (down 6.38 per cent) recorded the biggest losses on ASX 200. Gold mining company Evolution Mining was the biggest laggard on the market at midday but rebounded slightly, closing 3.9 per cent lower.

Dragged down by Wesfarmers (down 1.5 per cent) and Aristocrat Leisure (down 2.7 per cent), consumer discretionary was the worst-performing sector. The real estate sector dipped by 0.9 per cent, after industrial property giant Goodman Group fell by 1.1 per cent.

The four big banks had a mixed day as NAB fell 0.3 per cent, while Westpac (down 0.1 per cent) and ANZ (down 0.1 per cent) edged lower. CBA shares closed 0.1 per cent higher.

The lowdown

Chief economist at BetaShares David Bassanese attributed the market sliding to dips in the mining sector as a result of investor reactions to Trump’s comment on Wednesday that he intended to introduce tariffs on Chinese imports.

“Resources have taken a bit of a hit – Trump is the main driver of markets at the moment.

“His proposal to impose a 10 per cent tariff on China has obviously reverberated through our market today.

“Hopes are rising and falling depending on what he’s saying on tariffs,” said Bassanese.

Meanwhile, the federal government announced it will acquire $50 million of debt from Rex, making it the embattled regional airline’s biggest creditor. The money will allow more time to overhaul the airline and prepare it for sale. This comes after the company was placed into voluntary administration in July.

“This makes clear the government’s ongoing commitment to maintaining access to aviation services for regional and remote communities, and recognises the critical role of the Rex network to local economies,” a joint statement between Finance Minister Katy Gallagher and Transport Minister Catherine King said.

In the US, Netflix, Oracle and other big technology stocks lifted Wall Street as their profits pile higher and excitement builds around the moneymaking prospects of artificial intelligence.

The S&P 500 rose 0.6 per cent and came close to its all-time closing high set early last month. The Dow Jones added 130 points, or 0.3 per cent, and the Nasdaq composite climbed 1.3 per cent.

Quote of the day

“If he [Trump] puts the [additional] tariffs on China [and as a result] it doesn’t have many orders, we can get China to manufacture our stuff more cheaply, and that will offset the [adverse] currency movement.”

Retail billionaire and chair of Premier Investments Solomon Lew, on how Trump’s imposition of tariffs could lead to northern-hemisphere businesses deserting manufacturing in China. Lew said this could create more opportunities for Australian apparel companies to cut cheaper deals with China.

Read more of Elizabeth Knight’s opinion piece here.

You might have missed

Clothing and footwear brand Rivers will close all 136 stores across the country by mid-April, resulting in 650 job losses after the receivers and managers for parent company Mosaic Brands failed to find a buyer.

The closure makes Rivers the seventh brand in the Mosaic group to be axed, following Rockmans, Autograph, Crossroads, W Lane and BeMe in late September, and Katies in December.

with AP

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