ASX falls, Citi upgrades Fortescue Metals: Aus shares trading 1.1% lower at noon

Market Reports

by Melissa Darmawan

The Australian sharemarket has dug its heels into the red as losses across the board sinks the local bourse lower by 81 points or 1.1 per cent lower 7,431 at noon. The SPI futures are pointing to a fall of 85 points. The moves follow Wall St's slide after investors booked their profits in technology shares on caution around the Fed's support versus the climbing cases of Covid-19.

Materials and technology have been hardest hit, trading 1.7 per cent lower, followed by energy at 1.6 per cent then communication services at 1.5 per cent. Consumer staples have shed the least at 0.2 per cent.

Rio Tinto (ASX:RIO) is sinking 2.2 per cent lower at $105.85 while BHP (ASX:BHP) is down 1.4 per cent at $41.05. Fortescue Metals (ASX:FMG) is trickling 0.3 per cent lower compared to its peers.

The major banks are trading marginally lower with Commonwealth Bank (ASX:CBA) as the main drag, down 1.1 per cent. National Australia Bank (ASX:NAB) scratching lower at 1 per cent.

A couple of the stocks that hit record highs yesterday have retreated.

Macquarie Group (ASX:MQG) are trading 1.2 per cent lower at $176.97 while WH Soul Pattison (ASX:SOL) is down 0.2 per cent at $38.16. Meanwhile, Qube (ASX: QUB) has taken a dive by 3 per cent at $3.32.

However, there are some green shoots coming through.

Semiconductor maker Weebit Nano (ASX:WBT) is surging 38 per cent at $3.89 after unveiling their first commercial partnership. The memory technology maker has inked a deal with the US$1.3 billion Wall St counterpart Skywater Technologies to use Weebit Nano’s ReRAM technology for a minimum term of six years exposing the Aussie company to new markets like aerospace.

Resmed (ASX:RMD) is on the move, up 2.8 per cent at $40.66 while the price of coal has continued to firm up with the likes of Whitehaven Coal (ASX:WHC) trading 2.1 per cent higher at $2.96.

Meanwhile, Newcrest Mining (ASX:NCM) are advancing by 0.3 per cent at $24.19 after some positive drilling results while Pro Medicus (ASX:PME) defied the odds as they trade ex-dividend, gaining 0.1 per cent at $58.69.

Local economic news

Payroll jobs fell by 0.7 per cent in the fortnight to 14 August 2021, compared to a fall of 1.8 per cent in the previous fortnight, according to figures released by the Australian Bureau of Statistics.

Bjorn Jarvis, head of Labour Statistics at the ABS, said: “The largest falls in payroll jobs in the first half of August were in New South Wales (down 1.2 per cent), Queensland (down 1.0 per cent), the Australian Capital Territory (down 0.7 per cent) and Victoria (down 0.6 per cent).

“These four states and territories had lockdowns for either all or part of the first half of August, in addition to existing restrictions and border closures across the country.”

Payroll jobs in South Australia rose by 1.5 per cent in the first two weeks of August, following the lockdown in late July when payroll jobs fell by 2.0 per cent.

Company news

Perth based miner, Gold Road Resources (ASX:GOR) posted a fall in profit in the first half of this year. The update comes after the miner warned investors a month ago that several disruptions at its Gruyere Gold Mine was set to weigh on their headline production numbers.

Broker moves

Citi upgrades Fortescue Metals (ASX:FMG) to a buy with a price target of $18.50.

The broker upgrades the miner to a buy but reduces the target price to $18.50 from $19.50 on their forecast of the iron ore price. Citi believes that the iron ore price could hold at levels over US$100 per ton for longer than the market is currently factoring. Longer-dated market concerns regarding large-scale iron ore exports from Guinea now look much less certain.

Moreover, China's leading indicators are stabilising and have headed higher from recent lows.

Shares in Fortescue Metals (ASX:FMG) are trading 0.3 per cent lower at $17.87.
 
Best and worst performers

All sectors are in the red. The sector with the fewest losses is Consumer Staples, down 0.2 per cent. The worst-performing sector is Materials, down 1.6 per cent.

The best-performing stock in the S&P/ASX 200 is ResMed (ASX:RMD), trading 2.9 per cent higher at $40.72. It is followed by shares in Gold Road Resources (ASX:GOR) and Whitehaven Coal (ASX:WHC).

The worst-performing stock in the S&P/ASX 200 is Virgin Money UK (ASX:VUK), trading 6.78 per cent lower at $3.65. It is followed by shares in Omni Bridgeway (ASX:OBL) and Orocobre (ASX:ORE).

Commodities and the dollar

Gold is trading at US$1789.05 an ounce.
Iron ore is 4.2 per cent lower at US$132.19 a ton.
Iron ore futures are pointing to a fall of 1.9 per cent.
One Australian dollar is buying 73.56 US cents.

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