Materials & tech stocks tumble: ASX falls 1.7% at noon

The Australian sharemarket has tumbled this morning following a weak lead from Wall St after US stocks turned lower overnight on news that Fed Chair Jerome Powell confirmed a 50 basis point rise is on the table when the Fed meets in less than two weeks from today. Across the local bourse, materials are the biggest laggard, sinking more than 3 per cent, followed by technology and energy, while healthcare and consumer staples are the only two sectors trading higher.

Megaport (ASX:MP1) is weighing heavily on the tech space, down 13.7 per cent to $8.64 as the worst performer, while Afterpay owner Block (ASX:SQ2) is down 6.5 per cent to $145.97 after Wall St's Block fell 6.9 per cent overnight.

Mining companies OZ Minerals (ASX:OZL) and Mineral Resources (ASX:MIN) are sending shares lower after releasing quarterly updates.

OZ Minerals (ASX:OZL) said its full year production and costs guidance remains on track despite Covid-19 and weather interruptions. The company’s C1 cash costs were higher than the prior quarter with Covid-19 restrictions and wet weather leading to lower gold and copper production. Meanwhile, OZ Minerals reported a cash position of $210 million after reinvesting $176 million in growth projects. Shares are trading 5.8 per cent lower at $24.70.

Mineral Resources (ASX:MIN) said it remains on track to meet FY22 guidance after reporting on its March quarter, which saw a 16 cent increase in production volumes. Its iron ore shipments rose 22 per cent from the prior year period, driven by growth at the Utah Point Hub, while it remained lower when compared to the prior quarter. The company said its iron ore business is on track to meet guidance for export shipments, along with its Mt Marion lithium project. Shares are trading 1.8 per cent lower at $60.94.

Heavyweight miners are crashing, led by BHP (ASX:BHP), which has dropped 4.5 per cent to $48.44. Rio Tinto (ASX:RIO) has fallen 3.2 per cent to $112.65 and Fortescue Metals (ASX:FMG) is trading 2.2 per cent lower at $21.01. Gold miners are adding to the fall, led by Northern Star (ASX:NST), which is down 3.7 per cent to $10.80.

Energy stocks are amongst the decline, led by Woodside Petroleum (ASX:WPL), which is down 2.2 per cent to $32.26. Beach Energy (ASX:BPT) has fallen 2.1 per cent to $1.66 and Santos (ASX:STO) trading 1.4 per cent lower at $8.25.

Major banks are lower, led by Commonwealth (ASX:CBA), which has fallen 2.3 per cent to $105.89, and Macquarie (ASX:MQG), which is down 2 per cent to $206.71. ANZ Banking is shedding the least (ASX:ANZ), trading 0.5 per cent lower at $27.85.

On a brighter note, CSL (ASX:CSL) is leading the healthcare space, up 1.5 per cent to $271.05 as the top performer.

At noon, the S&P/ASX 200 is 1.7 per cent or 126.1 points lower at 7466.7.

The SPI futures are pointing to a fall of 117 points.

What else to keep an eye on?

The S&P global purchasing manager’s indexes for April were released with the following figures:

Flash Australia PMI composite output index rose from 55.1 in March to 56.2 in April. This marked a third consecutive month of expansion for Australia’s private sector and at the fastest rate in two months. Private sector output expanded at a faster pace in April with service sector business activity driving the improvement. This came as new orders for Australian goods and services grew at the fastest rate since May 2021.

Flash Australia services PMI activity index rose to 56.6 in April from 55.6 in March, marking a third consecutive month in which Australian services output expanded. Improvements in Covid-19 conditions underpinned the growth of demand for Australian services, thus leading to the uptick in business activity in April.

Flash Australia manufacturing PMI improved from a final reading of 57.7 in March to 57.9 in April. This marked the twenty-third successive month in which conditions in the manufacturing sector strengthened, with the latest improvement the most marked in five months. Manufacturing production expansion accelerated in April amid faster new orders growth. This was underpinned by better local and overseas demand with new export orders seeing growth for the first time in four months.

Elsewhere, there are several broker calls that are all downgrades, starting with Morningstar with five broker downgrades. Challenger (ASX:CGF) cut to hold from buy, with shares trading 3.7 per cent lower to $7.22, Growthpoint (ASX:GOZ) cut to sell from hold, with shares trading 1.1 per cent lower at $4.43, Steadfast Group (ASX:SDF) cut to hold from buy, with shares trading 0.4 per cent lower at $4.98, Worley (ASX:WOR) cut to sell from hold, with shares trading 3.2 per cent lower at $13.96 and Newcrest (ASX:NCM) cut to hold from buy, with shares trading 1.5 per cent lower at $28.37.

Goldman Sachs cut Bega Cheese’s (ASX:BGA) rating to sell from neutral, with shares trading 1 per cent lower at $5.10, while Jefferies also downgraded Brambles (ASX:BXB) to underperform from hold, with shares trading 0.8 per cent lower at $10.73.

Credit Suisse also cut Endeavour Group (ASX:EDV) to underperform from neutral, with shares trading 0.6 per cent higher at $7.66, and Canaccord cut Megaport (ASX:MP1) to hold with a price target of $11, with shares trading 13.7 per cent lower at $8.64.

Meanwhile, Abu Dhabi Investment Authority is among investors in a consortium led by KKR seeking to buy Ramsay Health Care (ASX:RHC) for $20.1 billion, according to Bloomberg. The stock is up 29 per cent in 5 days, and is trading 0.8 per cent higher at $83.67.

On another note, Alliance Aviation (ASX:AQZ) has executed a $21 million facility agreement with the Northern Australian Infrastructure Facility. The 15-year deal provides Alliance with the final piece of funding required to complete the aircraft maintenance facility in Rockhampton. Construction has commenced, while it expects practical completion to finish by November this year. Shares are trading 2.2 per cent lower at $3.96.

Best and worst performers

The best-performing sector is health care, up 0.6 per cent. The worst-performing sector is materials, down 3.4 per cent.

The best-performing stock in the S&P/ASX 200 is CSL (ASX:CSL), trading 1.5 per cent higher at $271.05. It is followed by shares in Corporate Travel Management (ASX:CTD) and Charter Hall Retail REIT (ASX:CQR).

The worst-performing stock in the S&P/ASX 200 is Megaport (ASX:MP1), trading 13.7 per cent lower at $8.64. It is followed by shares in Paladin Energy (ASX:PDN) and Block (ASX:SQ2).

Commodities and the dollar

Gold is trading at US$1952.43 an ounce.
Iron ore is 0.4 per cent lower at US$150.05 a ton.
Iron ore futures are pointing to a fall of 1.9 per cent.
One Australian dollar is buying 73.60 US cents.