Soft China economic data snaps ASX rally

Some dark economic data out of China triggered a sell-off in heavyweight mining stocks on Tuesday, pulling the Aussie market down from record highs.

The sharemarket pulled back from record highs on Tuesday as soft economic data out of China triggered a sell-off in heavyweight iron ore miners.

The benchmark ASX200 slipped 18.3 points, or 0.23 per cent, to close at 7999.3 points, while the broader All Ordinaries index fell 19.1 points, or 0.23 per cent, to 8243.3.

Tech stocks edged down 0.16 per cent to 3160.

Eight of 11 industry sectors ended in the red, led by materials with a 0.92 per cent fall.

Softer-than expected Chinese data hit iron ore futures and the big miners slumped on the news.

BHP fell 1.35 per cent to finish at $43.08 a share while Rio Tinto tumbled 2.5 per cent to $116.81.

China’s second-quarter 2024 GDP lifted 4.7 per cent year-on-year, below an expected 5.1 per cent, marking the slowest growth rate since the first quarter of 2023.

June retail sales in the Asian giant rose 2 per cent year-on-year, below an expected 3.4 per cent.

Housing prices also declined by 4.5 per cent year-on-year last month after a 3.9 per cent fall in May, marking the 12th consecutive month of declines.

“The malaise has been compounded by Rio Tinto’s decision to green light the next stage of the massive Simandou iron ore project in Guinea,” IG markets analyst Tony Sycamore said.

Local bourse heavyweights BHP and Rio Tinto sold off in the July 16, 2024 trading day. Picture: NewsWire / Sharon Smith

“When the Simandou mine is fully operational in 2025, it is expected to produce about 120 million tonnes of iron ore per year.”

Rio reported first-half iron ore production of 157.4Mt for 2024, a 2 per cent fall from H1 2023.

Its full-year guidance on iron ore shipments remains unchanged at 323Mt to 338Mt.

The discretionary sector ended its nine-day winning streak, falling 0.82 per cent.

Nick Scali lost 2.18 per cent to $13.91, while Harvey Norman shed 1.77 per cent to $4.43 and Super Retail fell 1.94 per cent to $14/14.

The big banks were mixed, with Commonwealth Bank slipping 0.18 per cent to $132.44, ANZ down 0.16 per cent to $29.78, while Westpac rose 0.24 per cent to $28.18 and NAB was up slightly at 0.34 per cent to close at $37.38.

The Aussie dollar lost 0.32 per cent to buy US67.3c at the closing bell.

Tuesday’s fall snapped a rally that kicked off last week on expectations of imminent rate cuts from the US Federal Reserve.

A rate cut in the world’s largest economy would serve as a new tailwind for equities across the globe and the ASX200 cracked the 8000 barrier for the first time on Monday.

The ASX200 dipped lower from record highs on Tuesday. Picture: NewsWire / Christian Gilles

Wall St rose overnight on Monday, with the Dow Jones lifting 210 points, or 0.53 per cent, to 40,211.

The S&P 500 rose 0.28 per cent to 5631 and the tech-heavy Nasdaq index gained 0.4 per cent to 18,472.

In corporate news, toll road operator Transurban edged up 0.31 per cent to $12.91 following the release a review into the complex NSW toll system.

The review recommends the state reduce “the level of tolls” and move to a “network approach to tolling to provide for a uniform tolling methodology”.

Counter-drone technology company DroneShield crashed 22.3 per cent to $2.02 on no obvious news.

The company received a “please explain” notice from the ASX.

In response, the company suggested an article from Capital Brief may have triggered the dramatic price action.

Tuesday’s sell-off followed an eight-week run-up in the stock from 92c in mid-May.

The top gainer on the ASX200 was Lifestyle Communities, which jumped 5.5 per cent to $10.87 after a sharp 18 per cent fall on Monday.

The largest laggard was Bellevue Gold, which slumped 3.37 per cent to $1.86.

Originally published as Soft China economic data snaps ASX rally