ASX ends the week sharply lower as miners slump

The Australian sharemarket fell sharply on Friday as mining giants and energy stocks dragged on the local bourse, capping off a poor week for global equity markets, as investor confidence continues to be tested.

The ASX dropped 136.2 points, or 1.6 per cent, to 8,416.50, with nine of the market’s 11 sectors falling. The materials sector was the biggest weight on the index, as mining giants declined after a report that tensions between BHP and China had flared up again as the two sides negotiate iron ore exports.

Global giant BHP (down 3.2 per cent), Rio Tinto (down 3.2 per cent) and Fortescue (down 5.5 per cent) all tumbled, while gold miners including Northern Star (down 4 per cent) Evolution Mining (down 4.5 per cent) also fell heavily.

Amid ongoing talks over iron ore exports, China’s state-run iron ore buyer, China Mineral Resources Group Co, told the nation’s major steel producers and traders to stop purchasing a second type of ore from BHP, Reuters and Bloomberg reported, citing confidential sources.

The reports follow a move by CMRG in September to stop Chinese steel mills buying another variety of iron ore from BHP after talks on long-term contracts faltered. BHP declined to comment on Friday.

Energy shares fell as the oil price declined, with Woodside (down 2.7 per cent) and Santos (down 3 per cent) both ending the day lower.

Three of the major banks lost ground, with Westpac falling 1.6 per cent, National Australia Bank shedding 0.8 per cent and ANZ Bank losing 1.5 per cent. Commonwealth Bank, the largest company on the index, closed flat, reversing an earlier slide.

Most tech stocks lost ground, but WiseTech jumped 2.4 per cent after the software giant confirmed its financial guidance. Xero fell 1 per cent, Technology One shed 3.4 per cent and NextDC retreated 2.2 per cent.

Treasurer Jim Chalmers announced he had blocked US healthcare giant Cosette’s bid to buy Mayne Pharma, saying the $672 million deal would be contrary to Australia’s national interest. In a media release this morning, Chalmers said he had accepted the “very clear and unambiguous” recommendation from the Foreign Investment Review Board (FIRB) to block the deal.

Mayne’s share price jumped 21 per cent on Thursday on hopes that the deal may go ahead but fell 23 per cent on the announcement today before being placed in a trading halt.

The Australian dollar was trading at US64.47¢ at 4.57pm AEDT.

AMP deputy chief economist Diana Mousina said that “risk-averse” sentiment had dominated this week, and concerns about an artificial intelligence bubble were tested with results from chip-maker Nvidia. But the company’s strong numbers were not enough to prevent declines in the US market, amid ongoing debate about the extent of further interest rate cuts.

“While these results [Nvidia’s] were good and initially the Nvidia share price responded positively, other issues around expectations for rate cuts dragged the market down,” Mousina said

US shares were down 2.9 per cent for the week and the ASX was down 2.2 per cent, Mousina noted.

Friday’s drop followed a grim US session overnight, with solid earnings from the world’s biggest company not enough to allay fears about sky-high equity valuations.

The S&P 500 fell 1.6 per cent, the Dow Jones Industrial Average dropped 386 points, or 0.8 per cent, and the Nasdaq composite sank 2.2 per cent.

The sharpest losses again hit what used to be the market’s biggest winners. Nvidia, cryptocurrencies and other areas that had soared with nearly relentless momentum, as traders feared missing out on more gains, forced the market lower. Bitcoin dropped below $US87,000, down from nearly $US125,000 last month.

Nvidia initially appeared to tamp down the worries about a bubble for AI stocks after reporting a big profit, along with a forecast for coming revenue that easily cleared analysts’ expectations. By delivering strong profits and indicating more are coming, Nvidia can justify its stock’s price gains and make it look less expensive.

Nvidia jumped to an early gain of 5 per cent but then dropped to a loss of 3 per cent. Because it’s the biggest company in the US market by value, Nvidia’s stock has more pull on the S&P 500 than any other company’s.

Amazon went from an early gain of 2.1 per cent Thursday to a loss of 2.5 per cent. Palantir Technologies swung from a jump of 5.5 per cent to a loss of 5.8 per cent.

The last time the overall stock market had swings in one day as wild as Thursday’s was in April, when President Donald Trump shocked the world with his stiff “Liberation Day” tariffs.

Companies enmeshed in the crypto industry also tumbled, as bitcoin dropped to its lowest price since April. Robinhood Markets fell 10.1 per cent, and Coinbase Global sank 7.4 per cent.

For the second worry that’s been dogging Wall Street, interest rates, Thursday’s jobs report from the US government came in mixed and offered some relief. Financial markets initially seemed to pick the data apart for encouraging signals, according to Seema Shah, chief global strategist at Principal Asset Management.

The report showed hiring by US employers was stronger in September than economists expected, which may suggest the economy remains solid. But it also said the unemployment rate worsened slightly, which could give the Fed reason to cut its main interest rate at its next meeting in December.

Traders still see a December rate cut as relatively unlikely, giving it a roughly 40 per cent probability, according to data from CME Group. But that’s better than the 30 per cent chance they saw a day earlier.

With AP, AAP, Bloomberg

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