Weakness in Australian shares deepened on news of a fire at Ukraine nuclear power plant Zaporizhzhia after a Russian attack. Investors are speculating if the five-day rally is likely to be short-lived after Australian shares opened lower on a tech and energy drag. Oil prices slipped after spiking to historic highs while concerns mount on rising inflation.
Aussie investors made a pivot today and are taking risk off the table, piling into safe havens. Consumer staples are the only outperformers amid its ability to pass on rising costs to consumers, while gold miners are back in favour.
The breather comes after investors digested strong GDP figures and a widening trade surplus, supporting a strengthening of the Aussie dollar. The commodity boom triggered a resources rally, pulling the local bourse with it after shares were wounded on news of Putin, painting red now for its second week.
Political commentators said that Putin is likely not to capitulate on its plans to take control of Ukraine. Traders on Wall St bought into safe havens like US treasury bonds, pushing the yield higher, prices lower as they monitor war headlines on a hot inflation backdrop. Analysts said that the price of crude has more room to rally despite the Iran nuclear deal on the horizon, sparking further angst on what pricing pressures will mean for everyone involved.
Retail sales rose by 1.8 per cent in January from the month before after a final 4.4 per cent fall a month earlier as per the Australian Bureau of Statistics, after releasing detailed retail sales numbers.
Given the broad-based sell-off, bright spots include Meridian Energy
(ASX:MEZ), up 3 per cent to $2.99, Newcrest Mining
(ASX:NCM), up 2.1 per cent to $25.85.
Laggards are Block
(ASX:SQ2), tumbling 9.2 per cent to $153.08, Zip Co
(ASX:Z1P) diving 11 per cent to $1.66 Reece
(ASX:REH), down 4.4 per cent to $18.74
Meanwhile, S&P have cut Russia's rating to "CCC-" from "BB+" on 3rd March, pushing it further into "junk" territory as expanding economic sanctions and the nation's own protective measures ramped up default risk. This comes after Moody's credit rating dropped Russia’s long-term issuer and senior unsecured debt ratings to B3 from Baa3.
Asian markets have tracked Wall St with Japan tumbling over 2.4 per cent amid a weakening yen as energy and tech shares lead to the downside also. China is likely to unveil its lowest economic growth target in more than three decades when top leaders meet tomorrow for a key political meeting. The move is likely to put pressure on the government to step up fiscal stimulus to spur demand and jobs.
At noon, the S&P/ASX 200 is 1.5 per cent or 107.60 points lower at 7043.80.
The SPI futures are pointing to a fall of 97 points.
Best and worst performersAll sectors are in the red. The sector with the fewest losses is consumer staples, down 0.2 per cent. The worst-performing sector is information technology, down 4.2 per cent.
The best-performing stock in the S&P/ASX 200 is Incitec Pivot
(ASX:IPL), trading 2 per cent higher at $3.27. It is followed by shares in Gold Road Resources
(ASX:GOR) and Newcrest Mining
(ASX:NCM).
The worst-performing stock in the S&P/ASX 200 is Paladin Energy
(ASX:PDN), trading 15.1 per cent lower at $0.73. It is followed by shares in Zip Co
(ASX:Z1P) and Block
(ASX:SQ2).
Commodities and the dollarGold is trading at US$1948.20 an ounce.
Iron ore is 5.5 per cent higher at US$153.00 a ton.
Iron ore futures are pointing to a rise of 3.54 per cent.
One Australian dollar is buying 73.07 US cents.
