Rollercoaster session for ASX, fails to hold onto post-Reserve Bank of Australia meeting rally

The ASX surged after the RBA flagged keeping the cash rate at its historic low for another two years, but couldn’t hold onto the gains.

The Australian sharemarket slumped lower despite positive overseas leads and after failing to hold onto its post Reserve Bank of Australia meeting rally.

The benchmark S&P/ASX200 index closed 0.63 per cent lower at 7324.3, while the All Ordinaries Index erased 0.59 per cent to 7646.6.

Ord Minnett said US stocks rose overnight in generally lacklustre trade, as investors looked ahead to the Federal Reserve’s monetary policy meeting on Wednesday, while European stocks hit record highs as expectations of interest rate hikes supported bank stocks.

CommSec analyst Steven Daghlian said the local bourse started out in the green but faded as investors traded tentatively awaiting the outcome of our own central bank’s monthly board meeting.

OMG chief executive Ivan Tchourilov said it had been a rollercoaster, with the ASX gaining ground after the RBA determined to keep the cash rate on hold, as expected, while noting higher than expected inflation.

“The Reserve did well to remain ambiguous on expectations, although we’re still looking at a 2023 interest rate hike instead of the previous 2024 forecast,” Mr Tchourilov said.

All eyes were on the Reserve Bank of Australia board meeting outcome.

“Commodity prices were mixed, as was our resources sector.”

After iron ore prices slumped, Rio Tinto lost 2.54 per cent to $88.66, BHP dropped 2.34 per cent to $35.56, Fortescue shed 2.65 per cent to $13.95 and Champion Iron sank 7.22 per cent to $4.24.

Nickel miner IGO plunged 8.42 per cent to $8.92, while Whitehaven Coal plummeted 9.54 per cent to $2.37.

Origin Energy slid 1.95 per cent to $5.02, while Beach Energy dropped 3.93 per cent to $1.34 after announcing its managing director and chief executive Matt Kay had handed in his resignation to pursue other opportunities.

But battery minerals company Magnis Energy Technologies was a stellar performer, rocketing 18.48 per cent to 54.5 cents.

“Magnis released their annual report after market close yesterday and the market is starting to see some value in Magnis’ proposition,” Mr Tchourilov said.

“Despite operating at a loss without a finished product, they have $665m in binding offtake sales lined up for 2022.

“The patented battery technology is gaining traction in the US market, where a new battery plant is being built in New York to meet demand.

“Magnis has already returned 280 per cent in share price this year, but will be one to watch especially closely into 2022 when battery production begins to ramp up.”

IAG shares tumbled after it reported huge storm damage claims. Picture: Michael Klein

Insurance providers retreated after Insurance Australia Group downgraded its full-year guidance, upping its assumptions for hail and severe storm impacts in South Australia and Victoria last month to $1.045bn, from $765m previously.

“Cost allowances for natural perils have been lifted significantly after the first quarter came in more expensive than expected,” Mr Tchourilov said.

“Margin guidance for the period has slipped a full 3 per cent and they’re allowing room for extreme weather events to continue into next year.

“IAG is maintaining strong underlying performance as reported in its end of year results. However, if the first quarter is anything to go by, it will be an expensive year for insurance providers.”

IAG shares tumbled 7.03 per cent to $4.50, while Suncorp gave up 4.15 per cent to $11.31 and QBE softened 2.39 per cent to $11.83.

Financial technology platform provider Praemium Ltd leapt 14.46 per cent to $1.42 after knocking back Netwealth Group’s $785m takeover offer, saying the bid did not appropriately value its current performance and near-term trajectory.

Wealth manager Netwealth gave up 2.06 per cent to $17.15.

Westpac shares fell again after shedding 7.36 per cent on Monday. Picture: John Gass / NCA NewsWire

ANZ fell 1.1 per cent to $27.84, Commonwealth Bank backtracked 0.5 per cent to $105.76, National Australia Bank declined 0.88 per cent to $28.20 and Westpac slumped 2.73 per cent to $23.13 a day after releasing disappointing full-year results.

However, Morningstar equity analyst Nathan Zaia said Westpac could fix its productivity issues, noting it was the cheapest of the major banks.

Property stocks fared well, with Goodman Group surging 5.57 per cent to $23.49 after upgrading its full-year guidance, while Charter Hall Group rose 3.28 per cent to $18.59 after doing the same on Monday, while Lendlease added 2.39 per cent to $10.70.

Mr Daghlian said Goodman, the largest industrial property group on the ASX, which operates in 17 countries, was pocketing higher earnings partly because of demand for warehouses had surged during the pandemic-driven e-commerce boom.

Meal kit delivery service Marley Spoon continued to tumble after downgrading its full-year guidance last week, sinking 11.9 per cent to 92.5 cents.

The Aussie dollar was fetching 74.76 US cents, 54.76 British pence and 64.4 Euro cents in afternoon trade.

Originally published as Rollercoaster session for ASX, fails to hold onto post-Reserve Bank of Australia meeting rally