ASX slumps on wobbly miners after China stimulus disappoints

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

The numbers

The Australian sharemarket has started the week on a sour note, breaking its three-day winning streak as the big miners fell sharply after China’s new economic package failed to wow investors.

The S&P/ASX 200 index finished lower by 28.9 points or 0.4 per cent at 8266.2 points, with four of the industry sectors in the red, most notably materials, falling close to 3 per cent across the board.

Wall Street closed the week with more gains. Credit: AP

China unveiled a 10 trillion yuan ($2.1 trillion) debt package on Friday to ease local government financing strains and stabilise flagging economic growth, but officials refrained from announcing direct economic stimulus, sending a shudder across global markets.

The lifters

Property stocks have started the week off strongly, with the Goodman Group (up 2.5 per cent), Westfield’s parent company Scentre Group (up 1.1 per cent) and Stockland Group (up 2.1 per cent) making gains.

The big four banks posted a mixed session, with ANZ up 0.03 per cent and NAB up 0.9 per cent, while Commonwealth Bank closed up 0.3 per cent after crossing the $150-a-share mark earlier in the day. Westpac lost 0.4 per cent to close in the red.

Tech stocks also put on a good show, with WiseTech Global up 2.2 per cent and accounting service Xero up 1.6 per cent.

The laggards

Mining heavyweights Fortescue (down 7.3 per cent), BHP (down 4 per cent) and Rio Tinto (down 3.1 per cent) all had a horror session, as the iron ore price slumped on a dour response from investors to China’s latest stimulus measure and fears of oversupply. Weaker oil prices also weighed down energy stocks, with Woodside down 0.2 per cent, Santos down 0.8 per cent and Ampol down 0.7 per cent.

Dan Murphy’s and BWS parent Endeavour Group slumped 4.9 per cent after warning of lower profit in the six months to the end of the year, with sales at stores flat lining.

The lowdown

Moomoo market strategist Jessica Amir said that despite the lag on the index on Monday, the overall trend on the ASX has been positive, with US businesses bolstered by the prospect of reduced taxes and regulation.

However, if US-imposed tariffs on China go ahead, it may cause ripples on the Australian sharemarket.

“The more buying of the US dollar and the higher that goes, the more it hurts the Aussie sharemarket and puts pressure on commodity prices, and stocks go down,” Amir said, adding: “It’s not all about China’s [stimulus], but Trump’s business policy such as tariffs.

“Gold is down today, every commodity price is suffering a 2 per cent loss because we have a higher US dollar, and traders are betting that Donald Trump will put tariffs on China.

“Iron ore stocks have fallen heavily today – it is now down 3 per cent because we didn’t get the stimulus we wanted out of China. Investors are taking profits off the table and de-risking commodities, and they are rotating to the key benefactors that will benefit from the new president and the new policies coming in.”

Amir added that it is “not all doom and gloom”.

“Yes, the Aussie sharemarket has stepped down today, but Aussies are aware that we are in a stock-picker’s market, and they’re buying anything that is going to benefit from the reduction in US interest rates and from Trumps pro-business stance.”

On Friday, the S&P 500 rose 0.4 per cent to cap its biggest weekly gain since early November 2023 and briefly crossed above the 6000 level for the first time. The Dow Jones climbed 259 points, or 0.6 per cent, while the Nasdaq composite added 0.1 per cent.

On Wall Street, Axon Enterprise, which sells Tasers and body cameras used by police officers, helped lead the market. It jumped 28.7 per cent after delivering stronger profit for the latest quarter than analysts expected. It also raised its revenue forecast for the full year to $US2.07 billion ($3.1 billion), which would mean 32 per cent growth.

All told, the S&P 500 rose 22.44 points to 5995.54. The Dow gained 259.65 to 43,988.99, and the Nasdaq composite edged up 17.32 to 19,286.78.

In the bond market, longer-term Treasury yields eased.

A preliminary report in the morning suggested sentiment among US consumers had risen for a fourth straight month to its highest level in six months. The survey from the University of Michigan, which was conducted before Tuesday’s election, also found expectations for inflation in the coming year had eased to the lowest level since 2020.

The yield on the 10-year Treasury bond slipped to 4.30 per cent from 4.33 per cent late on Thursday but is still well above where it was in mid-September, when it was close to 3.60 per cent.

Treasury yields climbed in large part because the US economy has remained much more resilient than feared. The hope is that it can continue to stay solid as the Federal Reserve keeps cutting interest rates to keep the job market humming, now that it’s helped get inflation down nearly to its 2 per cent target.

Tweet of the day

Quote of the day

Vittoria has won its legal battle against the second-largest coffee company in the world, which picked a fight against the Australian brand over its instant coffee glass jar packaging, saying it was passing off Moccona’s “iconic” jar shape.

“I do not consider there to be a real, tangible risk that a notional buyer, with a recollection only of the [Moccona] shape mark’s rough proportions and general shape, would be perplexed, mixed up, caused to wonder, or left in doubt, about whether instant coffee sold in the [Vittoria] jar shape has the same commercial source as coffee sold in the [Moccona] shape mark,” Justice Michael Wheelahan stated.

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with AP

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