ASX retreats after RBA holds rates; tech stocks slump, miners rally

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

The numbers

The Australian sharemarket retreated on Tuesday, closing the session in the red after the Reserve Bank held interest rates at 4.35 per cent for the ninth consecutive meeting, with tech and bank stocks wiping out a boost from energy stocks and miners.

The S&P/ASX 200 fell 30 points, or 0.4 per cent, to 8393 points at close, with eight of the 11 industry sectors declining. The Australian dollar traded lower, and was valued at US64¢ at 5.09pm AEDT. The index started the day in a much worse position and managed to regain some ground, especially after the RBA’s latest “dovish” commentary on interest rates.

Nvidia’s woes sent Wall Street lower.Credit: AP

The lifters

Shares in mining giants BHP, Rio Tinto and Fortescue all rallied, soaring 3.1 per cent, 4.9 per cent and 6.2 per cent, respectively, after China’s top leaders used their most direct language on stimulus in years, stoking hopes for more iron ore demand from their biggest export market. Yancoal Australia added 2 per cent.

China’s Politburo vowed to embrace a “moderately loose” strategy for monetary policy in 2025, marking its first major shift in stance since 2011. The top leaders pledged to take a “more proactive” approach on fiscal policies, stabilising property and stock markets, while promising to “forcefully lift consumption”.

Energy companies also advanced as oil prices jumped following the ousting of Syrian leader Bashar al-Assad. Oil and gas giant Woodside climbed 1.5 per cent, while Santos also rose 0.8 per cent.

The laggards

The tech sector led local declines, slumping 4 per cent after AI giant Nvidia’s 2.6 per cent drop on Wall Street overnight, which pushed US share indexes off their records. WiseTech Global – the biggest tech stock on the ASX – shed 4.4 per cent in market value. Software maker Xero also fell 4.4 per cent, TechnologyOne was down 3.3 per cent and NextDC dropped 3.4 per cent.

China said it’s investigating Nvidia over suspected violations of Chinese anti-monopoly laws. Nvidia has skyrocketed to become one of Wall Street’s most valuable companies because its chips are driving much of the world’s move into artificial intelligence. That gives its stock’s movements more sway on global tech stocks than nearly every other.

Financial stocks were also among the session’s worst performers, with a sector loss of 1.7 per cent. All the big four banks were down, with the Commonwealth Bank – the biggest stock on the Australian market – down 1.1 per cent. NAB lost 2.8 per cent, Westpac shed 1.9 per cent and ANZ was down 1.8 per cent. Macquarie (down 1.9 per cent) fell, and insurers QBE (down 0.4 per cent) and Suncorp (down 1.6 per cent) were also in the red.

Financial services firm Perpetual Limited slumped 8.4 per cent, after warning shareholders it could face a $500 million tax bill related to the sale of assets to an affiliate of private equity giant Kohlberg Kravis Roberts (KKR).

IAG shares were down 1.7 per cent after the insurer said it would defend itself against a class action in the Victorian Supreme Court alleging the misleading of customers about the extent of discounts they would receive under a loyalty program.

Shares in News Corp dropped 0.2 per cent after Rupert Murdoch’s bid to change an irrevocable family trust to cement his eldest son Lachlan’s control of the family empire after his death and secure their media assets’ conservative positioning was quashed.

Pro Medicus (down 9 per cent) led losses in the health care sector, with CSL and Resmed registering marginal gains.

The lowdown

IG market analyst Tony Sycamore noted the RBA’s “dovish pivot” in the statement accompanying its decision to hold interest rates at 4.35 per cent, in which it shared that decision-makers were “gaining some confidence that inflationary pressures are declining”.

While maintaining it would be premature for the RBA to wave the “mission accomplished flag”, Sycamore said it was a “pretty good sign that they are feeling more comfortable about where inflation is heading”.

The bourse pared some of its early losses after the central bank carefully shared its bullishness about inflation figures. However, that wasn’t enough to swing the benchmark index into the green. The RBA is looking for a sustained easing of inflation before cutting borrowing costs.

On Wall Street overnight, the S&P 500 fell 0.6 per cent, coming off its 57th all-time high of the year so far. The Dow Jones Industrial Average lost 0.5 per cent, and the Nasdaq composite dropped 0.6 per cent from its own record.

The week’s highlight for Wall Street will arrive midweek when the latest updates on inflation arrive. Economists expect the latest report to show the inflation that US consumers are feeling remained stuck at roughly the same level last month.

A separate report on Thursday, meanwhile, could show an acceleration in inflation at the wholesale level.

Tweet of the day

Quote of the day

“The receivers and managers of the Mosaic Brands Group have made the difficult decision to commence a store consolidation program which will impact approximately 160 stores across the group’s portfolio.”

KPMG, receivers of embattled budget retailer Mosaic Brands, on Tuesday, after choosing to axe women’s clothing brand Katies and close 80 combined Millers, Rivers and Noni B stores by mid-January. About 480 employees will lose their jobs as a result.

You may have missed

News Corp is edging closer to securing a deal for its pay TV and streaming group Foxtel with the billionaire-backed streaming platform DAZN, potentially taking the company that broadcasts the AFL and the NRL into foreign ownership.

Having put the business up for sale publicly in August, News Corp is in late-stage negotiations with DAZN, a sports streaming business backed by British-Ukrainian billionaire Len Blavatnik.

With AP, Bloomberg

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