ASX ends week in the red as miners, banks retreat

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

The numbers

The benchmark S&P/ASX 200 Index dropped 42.5 points, or 0.5 per cent, to 8666.9 on Friday, while the broader All Ordinaries was down 45.1 points, or 0.5 per cent, to 8934.3. Four of the index’s 11 sectors finished the day ahead, led by energy.

The Australian dollar was buying US65.78¢, from US66.16¢ about 5pm on Thursday.

Wall Street is digesting a series of results from high-profile companies.Credit: Bloomberg

For the week, the ASX 200 dropped 1 per cent, its worst weekly performance since a 3.9 per cent decline in the first week of April.

The week’s losses amounted to giving back about half of last week’s 2.1 per cent gains.

The laggards

Mining stocks weighed heavily on the bourse as their recent rally lost steam, with Fortescue slumping 3.4 per cent while BHP lost 1.9 per cent and Rio Tinto fell 3.4 per cent. Champion Iron was worst on ground, with a 4.9 per cent drop.

The big four banks continued losing ground with CBA – the largest stock on the bourse – dropping 0.4 per cent, NAB shedding 0.4 per cent, Westpac down 0.8 per cent and ANZ losing 0.7 per cent. AMP took a 4.8 per cent hit.

The lifters

Outdoor apparel retailer Kathmandu’s shares jumped 4.4 per cent after it announced it had poached Carla Webb-Sear from Qantas to become the group’s new chief financial officer. Webb-Sear was chief financial and strategy officer for the airline’s loyalty division. She will start in her new role in early August.

Defying other goldminers, producer Newmont rose 3.8 per cent after reporting a quarterly adjusted net income of more than $2.4 billion.

The energy sector finished the session firmly in the green, with stocks rising as oil prices strengthened. Woodside rose 3.7 per cent, while Santos and Ampol lifted 1 per cent each.

The lowdown

The Australian bourse has lost ground despite tech industries spurring the US market to modest overnight gains.

AMP chief economist Shane Oliver said the fall reflected profit-taking after the index’s strong 2.1 per cent gains last week, which had left it in record territory.

Volatility in the local market looks set to persist as traders eye coming inflation data and the local earnings season, Moomoo dealing manager Paco Chow said.

“Macro swings and stock-specific shocks are driving sharp moves across the region,” he said on Friday.

“Heading into today’s session, expect Asia to take its cues from Tesla’s drama, US tech euphoria, and fresh energy headlines, such as China’s mega dam plans.”

Overseas, the US market lifted after Google’s parent company, Alphabet, spurred the technology sector, securing a $1.5 billion deal with software firm ServiceNow.

Tesla shares fell 8.2 per cent after its profit report disappointed, while US President Donald Trump denied on social media that he was seeking to destroy Elon Musk’s companies.

Trading desks at firms including Goldman Sachs and Citadel Securities are telling clients to buy cheap hedges against potential losses in US stocks as a slew of risks loom over the market’s record advance.

Major indexes have soared as the US inks trade deals amid a solid earnings season. Wall Street’s so-called fear gauge hasn’t been this low since February, and the S&P 500 Index has rallied 28 per cent since April 8. The S&P 500 inched to a new record Thursday – its 10th in 19 days – on tech gains.

That backdrop is making it cheap to hedge against a market slump.

“If you are nervous, the market is making it very easy to rent hedges,” Goldman’s trading desk wrote in a note to clients.

The ASX has lost 1 per cent for the past five days, but sits 1.3 per cent below its 52-week high.

Overnight, the S&P 500 added 0.1 per cent to its all-time high set the day before. The Dow Jones fell 316 points, or 0.7 per cent, while the Nasdaq composite rose 0.2 per cent to its own record.

After the closing bell, the US Federal Communications Commission approved the merger of Paramount Global and Skydance Media, clearing the way for an $US8.4 billion ($12.7 billion) sale of some of the most prominent names in entertainment, including the CBS broadcast television network, Paramount Pictures and the Nickelodeon cable channel.

The FCC agreed to transfer broadcast licences for 28 owned-and-operated CBS television stations to the new owners after Paramount paid $US16 million to settle a lawsuit filed by US President Donald Trump over a 60 Minutes interview with former vice president Kamala Harris that aired in October.

FCC chairman Brendan Carr has said the agency’s review of the proposed merger was not connected to the civil suit.

The approval came after Skydance and its investment partner, RedBird Capital, assured the FCC of their commitment to unbiased journalism that represents diverse viewpoints. Skydance said it would appoint an ombudsman to evaluate complaints of editorial bias or other concerns about CBS in an effort to promote transparency and increased accountability.

Alphabet climbed 1 per cent after the company behind Google and YouTube delivered a fatter profit for the latest quarter than analysts expected. It’s leaning more into artificial-intelligence technology and said it’s increasing its budget to spend on AI chips and other investments this year by $US10 billion to $US85 billion.

That helped push up other stocks in the AI industry, including a 1.7 per cent rise for Nvidia. The chip company was the strongest single force lifting the S&P 500 because it’s the largest on Wall Street in terms of value.

But an 8.2 per cent drop for Tesla kept the market in check. Elon Musk’s electric-vehicle company reported results for the spring that were roughly in line with or above analysts’ expectations, and Musk is trying to highlight Tesla’s moves into AI and robotaxis.

The focus, though, remains on how Musk’s foray into politics is turning off potential customers, and he said several rough quarters may be ahead as “we’re in this weird transition period where we’ll lose a lot of incentives in the US”.

Stocks have broadly been rallying for weeks on hopes that Trump will reach trade deals with other countries that will lower his stiff proposed tariffs, along with the risk that they could cause a recession and drive up inflation. The record-setting gains have been so strong that criticism is rising about how expensive share prices have become. That in turn puts pressure on companies to deliver solid growth in profits to justify their gains.

Reactions in the sharemarket have generally been stronger than usual when companies beat or miss their profit targets by a wide margin, said Julian Emanuel of Evercore.

Other extreme moves have also been roaring beneath the market’s surface, including huge swings for “meme stocks”. Those are stocks where traders seek to jump in amid online cheerleading and ride it higher, before a halt in momentum leaves some investors holding the bag.

With AAP, AP, Bloomberg

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.