ASX extends losses on US rate concerns; $A falls below US64c

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

The numbers:

The Australian sharemarket continued to slide on Thursday after Wall Street extended its losses overnight following the release of the minutes from the Federal Reserve’s latest meeting.

The minutes suggested Fed officials are unsure about their next move, after taking the main interest rate they control to its highest level in more than two decades. Hopes had been rising among investors that last month’s rate hike by the Fed would prove to be its last.

The S&P/ASX 200 was down 49.2 points, or 0.7 per cent, to 7146.0 at the close as all sectors except energy, utilities and real estate investment trusts (REITS) traded in the red.

The Australian dollar also softened, dropping 0.4 per cent to 63.96 US cents at the close, after new figures showed the unemployment rate rose to 3.7 per cent in July.

The lifters

The energy sector pared back losses to close the day 0.4 per cent higher, as coal miners Yancoal and Whitehaven added 1.8 per cent and 1.4 per cent respectively.

REITs (up 1.1 per cent) was the strongest sector bolstered by heavyweight Goodman Group (up 5.7 per cent) after it posted a 17 per cent increase in operating profit to $1.8 billion over the financial year.

Shares in Australia’s largest poultry supplier, Ingham’s, skyrocketed more than 15 per cent after it revealed a 72.1 per cent increase in net profits to $60.4 million.

Inghams has staged a solid recovery from COVID lockdowns that scrambled supply chains, temporarily halted production on some products, caused mass absenteeism and hiked costs like chicken feed, fuel, and packaging, which it passed onto customers. Earnings also rose 13 per cent to $418.5 million.

Ingham’s chief executive Andrew Reeves said it may need to push through some price increases in the future if costs rise again, but that the company had “no immediate plans” to do so.

“We will just have to assess that as we work our way through the year as to whether or not we’ll be required to ask customers for further price increases,” Reeves said.

“But I don’t think it would be at the pace that we saw in the past 12 months.”

Shareholders were likely pleased by the company’s total dividend of 14.5 cents for the 2023 financial year, which is more than double the prior year.

The laggards

Miners (down 0.5 per cent) were among the weakest companies on the local bourse as lithium miners Liontown (down 4.9 per cent), and Allkem (down 2.1 per cent) slipped. Gold miner Evolution (down 4.8 per cent) weakened after it reported a 49 per cent profit slump.

Healthcare companies (down 1.2 per cent) also dropped, with Sonic Healthcare (down 5.7 per cent) and Resmed (down 5.2 per cent) among the biggest large-cap decliners.

Communication services companies (down 1.1) were also weaker, dragged down by Telstra which dropped 2.8 per cent – despite delivering a 13 per cent increase in annual profit – after the company said it would retain its InfraCo Fixed business.

The big four banks traded in the red, dragging down the broader financials sector (down 1.1 per cent). The country’s largest bank, CBA, dropped 0.1 per cent, NAB fell 2.1 per cent, Westpac shed 1.9 per cent and ANZ dipped 0.9 per cent.

Shares in investigative software company Nuix dropped 9.1 per cent to $1.44 a share, even as it reported a 59 per cent lift in underlying earnings. The company has been subject to several ongoing legal battles including an ASIC investigation into its reporting following an initial public offering in 2020. Shares in market operator ASX Limited fell 1.9 per cent to $60.50 after its results missed expectations.

The lowdown

TMS Capital portfolio manager Ben Clark said the market was buoyed by softer than expected job data and some individual company results but that overall, the index continued to drop off.

“The market thought there would be a gain in full-time jobs, but there was actually a softening,” Clark said. “It was a shot in the arm for the market because it shows there might be more room for the Reserve Bank to keep interest rates on hold.”

However, he said there was a broad sell-off on the back of continued weak Chinese data and upwards movement in bond yields, which he said made bonds relatively more attractive.

Meanwhile, he said some companies which beat earnings expectations last week and earlier this week were still catching up on some buying momentum, including Carsales.com (up 4.2 per cent), REA Group (up 1.3 per cent), Computershare (up 2.2 per cent) and Cochlear (up 1.9 per cent) which were all among the biggest large-cap advancers.

Magellan Financial Group, which reports its results on Friday, said after the market closed it had appointed Andrew Formica as its new chairman, replacing Hamish McLennan.

Tweet of the day

Quote of the day

“[The] volume [of phone sales] is up, and the average retail price that customers were willing to pay for new phones also increased slightly,” said Telstra chief executive Vicki Brady as the company reported a 13 per cent jump in full-year net profit to $2.1 billion.

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With AP

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