ASX slumps after weak US data; BHP shares drop on $60b deal

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

The numbers

Australian shares sunk to almost three-month lows Friday after higher-than-expected inflation figures in the United States and Australia pushed bond yields higher and weighed on the local bourse.

Wall Street fell as new figures showed the US economy slowed in early 2024, while inflation was higher than economists had expected.Credit: Bloomberg

The S&P/ASX 200 Index tumbled 107.1 points, or 1.39 per cent, to 7575.9 at the close.

The lifters

All 11 sectors lost ground, with technology stocks recording the smallest decline of 0.39 per cent.

Shares of gold miner Newmont soared 13.9 per cent to a 52-week high after the company revealed that Canada’s Lundin Gold had agreed to buy out 100 per cent of the balance of a stream credit facility agreement and offtake agreement for its Fruta del Norte gold mine in Ecuador for $US330 million ($505 million).

Newmont still holds a 31 per cent equity interest in Lundin, adding that the deal is part of its efforts to monetise non-core assets following its acquisition of Newcrest in 2023.

The company also said it realised an average gold price of $US2090 ($3203) an ounce in the March quarter, compared with $US1906 ($2921) an ounce in the previous quarter, providing further impetus for its stock.

Shares of Healthcare giant ResMed surged 9.6 per cent following its March quarterly earnings report that showed profit rose 29 per cent to $US300.5 million ($460 million), a 29 per cent increase year-on-year, exceeding analysts’ estimates of $US279 million ($427 million).

Earnings per share came in at $US2.13, US20¢ better than analysts’ consensus estimates.

Fortescue (up 3.3 per cent), together with Evolution Mining and Mineral Resources (both up 2 per cent) rounded out the top-five sharemarket advancers.

The laggards

The industrials sector dived 2.2 per cent, making it the worst performing on the ASX, followed by interest-rate sensitive real estate investment trusts (down 1.9 per cent).

BHP shares tumbled 4.6 per cent after the company confirmed to the market that it had made a £31.1 billion ($60 billion) offer to acquire UK miner Anglo American.

In a statement to the London Stock Exchange around the time the ASX closed for the week, Anglo American said it had rejected BHP’s takeover offer because it “significantly undervalues Anglo American and its future products”.

Shares in toll roads operator Atlas Arteria fell 4 per cent and employment website operator Seek saw its shares slide 3.7 per cent. They were among the top large-cap decliners.

The lowdown

AMP chief economist Shane Oliver said that although global sharemarkets have risen over the past week, the gains have been limited by inflation and interest-rate concerns.

“This was particularly the case for the Australian sharemarket, which fell back after higher-than-expected inflation led to talk of further [Reserve Bank of Australia] interest-rate increases, leaving the Australian market barely up for the week,” Oliver said. “Bond yields rose further, with the Australian 10-year bond pushing up to its highest since last November.”

On Wall Street, the S&P 500 Index fell 0.5 per cent, trimming gains that had so far resulted in a winning week. However, it could have been much worse, with the benchmark index down as much as 1.6 per cent earlier in the day.

The Dow Jones Industrial Average dropped 375 points, or 1 per cent, after falling as much as 700 points intraday. The Nasdaq Composite Index sank 100.99 points, or 0.64 per ent, to 15,611.76.

The US sharemarket felt the pressure of another rise in Treasury bond yields following disappointing data on the US economy. The report undercut hopes that sent the S&P 500 to a series of records this year: that the economy can avoid a deep recession and support strong profits for companies, even if high inflation takes a while to get fully under control.

The latest report stated that the US economy’s growth slowed to a 1.6 per cent annual rate during the first three months of this year, down from 3.4 per cent at the end of 2023. That was weaker than the market had been expecting. The report also stated inflation was higher during the three months than economists’ forecasts.

However, underneath the surface, the report may not have been as bad as initially thought. Much of the slowdown was due to a rise in imports and other factors that can swing sharply and quickly. The main engine of the economy – spending by US households – remained relatively solid.

Treasury yields climbed as traders pared bets for interest-rate cuts to rates this year. The yield on the 10-year Treasury rose to 4.7 per cent, from 4.66 per cent just before the report.

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With AP

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