Tech, consumer stocks drag ASX lower amid Middle East tensions

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

The numbers

The Australian sharemarket ran out of steam to close the day slightly lower, with energy stocks – boosted by a jump in oil overnight on the back of escalating violence in the Middle East – unable to keep the bourse in the green.

While the S&P/ASX 200 was in positive territory in afternoon trading, it eventually closed 10.7 points or 0.1 per cent lower to 8198.2, dragged down by tech (down 1.6 per cent) and consumer discretionary (down 1.7 per cent) stocks.

Tensions in the Middle East have unnerved markets.Credit: Bloomberg

The lifters

The top four-performing stocks were all energy players, with Karoon Energy at the top (up 7.5 per cent) followed by Strike Energy (up 7.1 per cent), Beach Energy (up 4.6 per cent) and Woodside Energy (up 3.1 per cent).

Among the miners, BHP added 0.9 per cent while Rio Tinto edged up 0.2 per cent.

Gold jumped overnight on the global developments. Northern Star (up 0.7 per cent), Newmont (up 1.3 per cent) and Evolution Mining (up 0.2 per cent) are all higher.

Meanwhile, ANZ finished 0.1 per cent lower after failing to overturn last year’s Federal Court judgment on a capital raising from almost a decade ago that was the subject of a criminal cartel case.

The laggards

Megaport wound up at the bottom of the bourse with a loss of 3.3 per cent. Corporate Travel Management dipped 3.2 per cent and Coronado Global Resources closed 2.9 per cent lower.

The lowdown

AMP chief economist Shane Oliver noted the number of factors influencing sharemarket movements, with shares at record highs as inflation slides and central banks cut rates.

“Recession risks, the escalating Israel conflict, the US election along with still stretched valuations mean a high risk of another sharemarket correction and continued volatility,” Oliver warned in a note.

“The expansion of the war around Israel and Iran attacking Israel with more missiles is very concerning but unless oil supplies are disrupted, the impact on global growth and shares will remain limited.

“The combination of global rate cuts, still okay global economic growth and Chinese stimulus are very positive for shares on a six-to-12-month horizon.”

KMD Brands, the operator of Kathmandu, Rip Curl and Oboz that has been hit hard by cost-of-living pressures, dipped by more than 1 per cent in early trading but finished 1.1 per cent higher after announcing the resignation of chief executive Michael Daly. He will be replaced by Brent Scrimshaw, who has been a director of the board since 2017 and is currently CEO of marketing services company Enero.

Meanwhile, JB Hi-Fi’s chief financial officer, Nick Wells, has moved to the chief operating officer role. His former role will be filled by David Giansalvo, who is currently the group general manager of analysis and planning. The electronics retailer’s shares closed 0.5 per cent lower.

Collins Foods, which on Tuesday afternoon announced a new chief executive in Austrade CEO Xavier Simolet, closed 1.4 per cent lower.

On Tuesday, the S&P 500 pulled 0.9 per cent lower, a day after setting an all-time high for the 43rd time this year. The Dow Jones lost 173 points, or 0.4 per cent. Both indexes hit records the previous day. The Nasdaq composite shed 1.5 per cent as drops in Big Tech stocks weighed on the market.

Oil prices jumped as worries ratcheted higher that worsening tensions in the Middle East could disrupt the flow of crude from the region. Israel’s military said on Tuesday that Iran had fired missiles into the country and ordered residents to shelter. A senior US administration official earlier in the day warned of “severe consequences” should a ballistic missile attack take place.

A barrel of benchmark US crude rose 2.8 per cent to top $US70. Shares of oil companies rose, with Exxon gaining 1.9 per cent and Marathon Oil gaining 3.6 per cent.

Shares of defence contractors also moved higher. Northrop Grumman rose 3 per cent. RTX, which co-produces the “Iron Dome” air defence system used by Israel, rose 2.7 per cent.

The sharp swings halted, at least temporarily, what had been a run to records for US stocks. They had been jumping on hopes the US economy can continue to grow despite a slowdown in the job market, as the Federal Reserve cuts interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years, and it’s indicated it will deliver more cuts through next year.

The question is whether the cuts will ultimately prove too little, too late after the Fed earlier kept rates at a two-decade high in hopes of braking on the economy enough to stamp out high inflation.

A discouraging report arrived Tuesday, showing US manufacturing weakened by more in September than economists expected.

A separate report was potentially more encouraging. It showed US employers were advertising more than 8 million job openings at the end of August.

Tweet of the day

Quote of the day

“We filed these proceedings back in 2018, ASIC considered at all times it was a very significant shortfall. It was material and it should have been disclosed to the market, and it wasn’t.”

“That view was upheld by a trial judge [last year] and has now been upheld by the full court. It’s really a matter for the ANZ board to reflect on these circumstances and see what changes, if any, they need to be making in their approach to these issues.”

That’s Australian Securities and Investments Commission (ASIC) chair Joe Longo who urged the big-four bank to reflect on itself after failing to overturn a Federal Court decision that it breached the law during a controversial $2.5 billion capital-raising almost a decade ago.

You may have missed

Australia’s clean energy transition notched a record this week as renewables surged to an all-time high of nearly 74 per cent of the entire east-coast electricity mix during a half-hour period, pushing fossil fuels to a new low.

Between 11.30am and midday on Tuesday, the contribution from millions of rooftop solar panels and large-scale renewable energy assets was at its highest ever, the Australian Energy Market Operator (AEMO) said.

With AP

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