ASX slides as ‘Trump trade’ peters out on Wall Street; miners, banks fall

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

The numbers

The Australian sharemarket closed in the red on Wednesday, weighed down by a slump in miners, IT stocks and banks. The slide follows a pullback in US stocks amid waning momentum for the “Trump trade”, which boosted Wall Street for days following Donald Trump’s presidential victory.

The S&P/ASX 200 Index finished lower by 62.20 points, or 0.75 per cent, at 8193.40 points, with all 11 sectors bar utilities declining. The Australian dollar gained modest ground, trading at 65.34 US cents. The losses came after the ASX slipped 0.1 per cent on Tuesday.

Wall Street retreated on Tuesday as the Trump trade lost steam.Credit: Reuters

The lifters

James Hardie started off as the morning’s best-performing large-cap stock, and continued to climb throughout the day to finish 6.2 per cent higher. The jump comes after the home-sidings maker reaffirmed its full-year forecast for a profit of at least $US635 million “despite greater market headwinds” than anticipated. It previously predicted between $US630 million and $US700 million in profit. First-half earnings slumped 23 per cent to $US238.7 million amid sluggish demand and higher raw material costs.

The utilities sector was the only sector to close in the green with a gain of 0.6 per cent, led higher by energy stocks from Origin and Meridian, which were up 0.9 per cent and 1.5 per cent, respectively.

The laggards

Commonwealth Bank shares fell after chief executive Matt Comyn said Australia’s economic growth was being hampered by high interest rates and persistent inflation as he delivered a $2.5 billion profit for the September quarter, unchanged from last year. CBA was down 1.3 per cent during the day, but managed to pare some of its loses to close 0.4 per cent lower. CBA is the nation’s largest lender and the biggest stock on the ASX.

The other Big Four banks also declined, with ANZ down 4 per cent as its shares went ex-dividend, National Australia Bank down 1.3 per cent, and Westpac down 0.3 per cent.

The materials sector fell 0.7 per cent as mining heavyweights BHP and Rio Tinto dropped 0.9 per cent and 3.3 per cent, respectively. The sector is struggling following news from China of weaker-than-expected stimulus measures announced late last week, coupled with concerns over the potential for higher tariffs under President-elect Donald Trump.

Mineral Resources shares slumped 7.2 per cent after the lithium miner announced it would mothball its Bald Hill mine operations to preserve cash until lithium demand and prices improve again.

Supermarket giants Woolworths and Coles also traded lower, declining 0.9 per cent and 0.7 per cent, respectively.

WiseTech Global shares fell 1.3 per cent, leading tech stocks lower, after law firm Phi Finney McDonald said it had initiated legal proceedings against the embattled software maker, alleging the company engaged in misleading conduct and breached its disclosure obligations to investors. Management vowed to “vigorously defend” the class action lawsuit in Victoria’s Supreme Court.

The lowdown

Tribeca Investment Partners portfolio manager Jun Bei Liu said the Australian sharemarket was experiencing a period of consolidation after the end of the “Trump trade”, which buoyed markets across the globe.

“There was just too much excitement going into Trump winning, and right now we’re just waiting for the policies to come through,” she said.

The bourse stayed in the red after data released by the Australian Bureau of Statistics showed wages rose by 0.8 per cent in the year to September, matching analyst expectations. Wages increased by 3.5 per cent over the quarter, marking the fastest real wage growth since September 2020.

Liu said the next big calendar event for global markets was the upcoming Black Friday and Cyber Monday sales at the end of the month and early December, which would give an indication of consumer demand and spending.

“Based on our feedback from retailers, things are actually tracking in line with last year, so it’s not as dire as some have predicted,” she said. “That should lead to a rally into December because I think the sharemarket actually looks pretty good in terms of valuation, in terms of earnings, and even where some of the inflation data is tracking.

“I think it’s just consolidation rather than anything structurally wrong with the equity market. Heading into December, we should be pretty strong to drive the market higher, and into January is where we start looking at potential rate cuts for us.”

Overnight, US stocks drifted lower as the S&P 500 slipped 0.3 per cent one day after setting its latest all-time high. The Dow Jones dropped 382 points, or 0.9 per cent, and the Nasdaq composite fell 0.1 per cent.

US stocks had been broadly rising since last week on expectations that Trump’s preference for lower tax rates and other policies may mean faster economic growth, as well as bigger US government debt and higher inflation. Some areas of the market rocketed on particularly high-grade fuel, such as smaller US stocks seen as benefiting the most from Trump’s America First ideas.

They gave back some of their big gains on Tuesday, and the Russell 2000 index of smaller companies fell a market-leading 1.8 per cent. Even Tesla, which is run by Trump’s ally Elon Musk, sank. It dropped 6.1 per cent for its first loss since before Election Day.

The US is expected to provide an update on inflation on Wednesday, when the US government will give the latest reading on prices that consumers are paying.

Economists expect it to show inflation accelerated to 2.6 per cent in October from 2.4 per cent the month before. But they’re also looking for underlying inflation trends, which ignore prices for groceries and fuel that can zigzag sharply from one month to another, to stay steady at 3.3 per cent.

Tweet of the day

Quote of the day

“I think the priority, to be honest, is to get inflation down, to get interest rates down and to support jobs in the economy.”

That’s Opposition Leader Peter Dutton speaking to Radio National, where he retreated from his commitment to tax cuts for high-income Australians, stating that any reform will depend on the economic situation.

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With AP

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