Energy stocks drag ASX lower

Aussie dollar weakens, gold gains and energy stocks pull the index lower after oil prices drop.

Picture; Getty Images/AFP

Market enthusiasm waned on Wednesday, with the S&P/ASX 200 closing out the session with a 0.4 per cent loss just a day after the benchmark surged into a new bull market.

An early boost sent the market up 0.8 per cent, but a “disturbing” consumer confidence read pulled the benchmark to a daily loss of 21 points, or 0.39 per cent, at 5466.7.

A warning from the IMF that the global economy would have its worst year since the Great Depression added to the market pessimism.

The All Ords was lower by 19 points, or 0.35 per cent, at 5523.3.

The Aussie dollar lost ground after reaching a five-week high on Tuesday and at the close of trade was 1.1 per cent weaker at US63.68c.

At the release of Westpac’s consumer sentiment survey, chief economist Bill Evans noted the steepest dive in confidence on record, with declines across all five sub-indexes.

“It is pertinent to note that the lows in previous recessions were reached after one to two years of continuous deterioration, compared to the one month collapse we have seen here. Certainly we cannot rule out the index dropping below the historic low of 64.6 we saw in November 1990,” Mr Evans said.

Local weakness came despite a lift on Wall Street overnight, with investor focus there on a potential restart of the economy.

OANDA’s Jeffrey Haley noted conflicting data points had investors split between camps.

“On the one hand, Wall Street rallied hard overnight as the V-shaped desperados seized on news that various states are now developing lockdown exit plans as a sign that peak-virus is upon much of the US,” he said.

“That contrasted with a massive increase in bad debt provisioning by JPMorgan and Wells Fargo Bank at their (first quarter) earnings call,” he said, adding that the IMF’s bleak economic outlook had compounded negativity in the local session.

To equities, and a few standouts bucked the market pessimism, most notably safe-haven gold stocks.

Overnight the gold price rallied to near record levels at $US1700 an ounce and Credit Suisse added to the bullishness, tipping the commodity to reach as high as $US2000 an ounce.

Newcrest rose 1.7 per cent to $29.31 and St Barbara edged up by 0.4 per cent to $2.52 but Evolution slipped by 0.4 per cent to $4.94 and Northern Star gave up 0.8 per cent to $13.02.

Energy names were the biggest drag for the session after oil prices fell overnight on doubts that cuts agreed by OPEC+ would be enough to offset demand weakness.

The sector fell 3.5 per cent as Woodside fell 3.6 per cent to $21.22, Oil Search dropped 4 per cent to $2.64 and Beach Energy lost 6.2 per cent to $1.37.

Across the major miners, BHP slipped 0.7 per cent to $31.43, Rio Tinto lost 1.2 per cent to $89.78 and Fortescue ticked lower by 1.5 per cent to $11.40.

To the major banks and speculation of a possible Westpac dividend cut didn’t stop the bank’s shares edging up 0.1 per cent to $16.29. Commonwealth Bank was the only one of the big four to finish at a loss, down 1.1 per cent to $62.07, while ANZ put on 0.4 per cent to $16.85 and NAB lifted by 0.6 per cent to $16.64.

QBE re-emerged from a trading halt after raising $1.2bn from existing investors and its shares slipped by 3.5 per cent to $8.79.

InvoCare shares added 2 per cent to $11.51 after it completed an upsized $200m capital raise.