ASX slides lower; Woolworths dives, Qantas and miners fall

Welcome to your five-minute recap of the trading day and how experts saw it.

The numbers

The Australian sharemarket retreated on Wednesday, pulled down by consumer staples, miners and energy firms following a negative lead from Wall Street, where tech stocks led the decline.

The S&P/ASX 200 fell 50.6 points, or 0.7 per cent, to 7608.4 at the close, as seven of the 11 industry sectors traded in the red.

Wall Street declined to start its week.Credit: Bloomberg

The lifters

Shares in logistics software maker WiseTech Global surged by more than 11 per cent after the company posted strong half-year financial results for the six months to December 31, leading gains on the local bourse.

The tech company, led by billionaire former AC/DC guitar repairman Richard White, posted revenue of $500 million – up 32 per cent on the same time a year earlier – and EBITDA of $230 million, up 23 per cent. Underlying net profit after tax was up 5 per cent to $128 million, and the company is hiking its dividend by 17 per cent, paying an interim fully franked dividend of 7.7 cents per share.

Information technology stocks (up 2.2 per cent) were stronger, mostly bolstered by WiseTech, but also buoyed by accounting software firm Xero (up 0.3 per cent) and TechnologyOne (up 0.2 per cent).

Hearing implant maker Cochlear (up 3.3 per cent) and Lynas Rare Earths were also among the biggest large-cap advancers.

The laggards

Woolworths (down 6.6 per cent) plunged after chief executive Brad Banducci stepped down in a shock announcement following eight years in the role. The broader consumer staples sector (down 4.3 per cent) was weaker, with competitor Coles dropping 4.2 per cent and bottle shop owner Endeavour Group slipping 3.2 per cent.

Iron ore heavyweights Fortescue (down 3.4 per cent), Rio Tinto (down 1.8 per cent) and BHP (down 2.4 per cent) were also among the biggest large-cap decliners, weighing on the mining sector (down 1.4 per cent).

Energy companies (down 0.4 per cent) dropped with Viva Energy Group losing 4.1 per cent and Santos slipping 0.8 per cent.

Qantas fell 2.3 per cent after the airline announced John Mullen would replace Richard Goyder as chairman from July, as part of a board overhaul to restore its bruised reputation.

Tourism provider Corporate Travel Management plunged more than 20 per cent after downgrading its full-year earnings expectations by $40 million and blaming softer demand for its worse-than-anticipated half-year results.

The lowdown

Capital Com senior financial market analyst Kyle Rodda said the Australian sharemarket battled a weak Wall Street lead, soggy corporate results and wage data, which all weighed on the index on Wednesday.

Australian wage data boosted the local currency but was unlikely to substantially affect the RBA’s interest rate expectations, he said.

“Wage growth rose more than expected last quarter to 4.2 per cent, taking the gauge to the highest level since 2009,” he said. “The data hasn’t meaningfully shifted RBA rate expectations, with signs of recent slack building in the labour market suggesting that wage growth is at or near its peak for the cycle.”

On Wall Street, technology stocks led Wall Street broadly lower as chipmaker Nvidia pulled back ahead of its earnings report this week.

The S&P 500, coming off only its second losing week in the last 16, fell 0.6 per cent. The Nasdaq composite gave up 0.9 per cent and the Dow lost 0.2 per cent. Markets were closed in the US on Monday for Presidents’ Day.

Technology stocks were among the biggest weights on the market. Nvidia, which has ridden a wave of investor enthusiasm over artificial intelligence, lost 4.4 per cent. The stock has more than tripled over the past year.

Walmart rose 3.2 per cent after reporting stronger-than-expected results for its latest quarter and issuing sales forecasts that came in ahead of what Wall Street was expecting.

Home improvement retailer Home Depot wavered between small gains and losses. It beat Wall Street’s earnings forecasts but gave investors a disappointing profit forecast for the year.

Outside of earnings, credit card company Capital One Financial rose 0.1 per cent as it moves ahead with a $US35 billion ($53.4 billion) buyout of Discover Financial Services. Discover soared 14 per cent.

Markets are coming off a heavy week of economic reports that hinted at stubborn inflation squeezing consumer spending in the world’s largest economy. That has pushed expectations for the Federal Reserve to start cutting interest rates further out into 2024.

Those lowered expectations for interest rate cuts and renewed worries about inflation have essentially tripped up the broader market.

“The narrative that drove us to these levels is very much being called into question,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

Bond yields fell. The yield on the 10-year Treasury slipped to 4.25 per cent from 4.28 per cent late Friday. The yield on the two-year Treasury fell to 4.58 per cent from 4.65 per cent.

Markets in Europe were mixed and markets in Asia were mostly higher.

China’s central bank kept its one-year loan prime rate unchanged on Tuesday but cut its five-year rate by 25 basis points to 3.95 per cent. That came as a surprise – the first time the five-year rate has been cut since May 2023.

More than 80 per cent of companies in the S&P 500 have reported their latest results. Analysts polled by FactSet expect overall earnings growth of about 3.3 per cent for the fourth quarter and forecast earnings growth of about 3.6 per cent for the current quarter.

Wall Street will have to wait until the end of February for another key update on inflation, when the government releases its monthly personal consumption and expenses report, which is the Fed’s preferred measure.

“The key question to answer now is whether inflation is bottoming out, and if it is, does it go sideways or back up,” Samana said.

Tweet of the day

Quote of the day

“I am conscious of the time commitment that this prestigious role requires and will be adjusting my other professional obligations so I can be fully focused on this exciting challenge,” said John Mullen, who will succeed Richard Goyder as Qantas chairman in July.

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Resources giant Santos’ decision to pump $1.3 billion into investors’ pockets after a profit slump has been labelled an “unsustainable” approach reliant on selling assets and increasing debt.

With AP

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