Energy & miners help offset tech fall: ASX closes 0.1% lower

Market Reports

by Melissa Darmawan

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The Australian sharemarket staged a recovery from its mid afternoon lull but not enough to close higher, weighed down by technology, healthcare and consumer discretionary stocks as miners and energy stocks advanced.

The index started to lose steam after fresh economic data showed a rebound in the number of building approvals in November, while market participants monitored the Covid-19 headlines. The nation posted a new record of over 100,000 new cases while an outbreak in Tianjin, China sparked a mass testing drive in an effort to maintain its Covid zero policy.

After Wall St fell triggered by the latest minutes from the Fed, the non-farm payroll jobs report confirmed expectations of a hawkish monetary policy tilt for market participants to be greeted by a week of inflation figures in the US, China, and a touch point locally. Aside from inflation print this week, fourth-quarter reporting season gets underway in the US with banks slated to be the first cabs off the rank.

The Melbourne Institute monthly inflation gauge rose by 0.2 per cent in December, up 2.8 per cent on the year. Unlike the US Federal Reserve, the Reserve Bank is mulling over three approaches to quantitative easing with governor Philip Lowe ruling out hiking the cash rate before 2023, and has reiterated this message a number of times.

Following a weak lead from Wall St, the local bourse continued to see a sell-off in technology shares with Afterpay (ASX:APT) falling 2.3 per cent to $72.29, with Xero (ASX:XRO), and WiseTech (ASX:WTC) both closing 2.7 per cent lower.

The energy sector rose for its second straight day amid the moves in Kazakhstan and the political unrest in Libya, Russia, and Ukraine boosting oil prices higher. Woodside Petroleum (ASX:WPL) added 2.3 per cent, Origin Energy (ASX:ORG) rose 1.1 per cent, while Santos (ASX:STO) closed 0.7 per cent higher.

Along with the energy majors, utilities also propelled higher by AGL (ASX:AGL) adding 8.6 per cent as the third best performing sector.

After rises in base metal prices and the recent surge in thermal coal prices amid the export ban by Indonesia, there were strong performances in the materials sector. BHP (ASX:BHP) jumped 2.4 per cent, Rio Tinto (ASX:RIO) rose 2.3 per cent amid a target price upgrade, while Fortescue Metals (ASX:FMG) closed 1.3 per cent higher. Whitehaven Coal (ASX:WHC) soared 5.1 per cent.

The financial sector closed mixed with Commonwealth Bank (ASX:CBA) outperforming adding 0.7 per cent, followed by Westpac (ASX:WBC), up 0.4 per cent. Macquarie Group (ASX:MQG) was the biggest decliner, down 1.8 per cent, followed by ANZ Bank (ASX:ANZ) and National Australia Bank (ASX:NAB) both closing 0.1 per cent lower.

Supply chain concerns and staff shortages dragged on retailers as the Omicron wave continued to dent consumer sentiment and spend. Wesfarmers (ASX:WES) fell 2.3 per cent, Coles (ASX:COL) slid 1.6 per cent and Woolworths (ASX:WOW) closed 0.7 per cent lower. Elsewhere JB Hi-Fi (ASX:JBH) tumbled 2.4 per cent, while Harvey Norman (ASX:HVN) closed 1.2 per cent lower.

Meanwhile, Hong Kong shares advanced on a technology rebound while China inched higher. U.S. futures wavered after the S&P 500 posted the worst start to a year since 2016. Japan is shut due to Coming of Age Day while European markets are pointing to a warm start.

At the closing bell, the S&P/ASX 200 was 0.1 per cent or 6 points lower at 7,447.

Local economic news

Dwelling approvals rose 3.6 per cent versus the expectations of 5 per cent in November led by growth in the private sector dwellings as per the Australian Bureau of Statistics. The rise followed a fall of 13.6 per cent in October, seasonally adjusted.

The Melbourne Institute monthly inflation gauge rose by 0.2 per cent in December, up 2.8 per cent on the year.

Company news

Incitec Pivot (ASX:IPL) has inked a deal to buy French explosives maker Titanobel for $142 million. It’s expected to close by June this year. Shares closed 2.1 per cent higher at $3.37.

Elsewhere, Sequoia Financial (ASX:SEQ) has revealed its latest acquisition adding a legal practice under its wing. Previously known as Topdocs Legal, now renamed Docscentre Legal, the $330,000 deal is earnings accretive as of today. Shares closed 0.7 per cent higher at 71.5 cents.

ASX-listed battery maker Novonix (ASX:NVX) has progressed further on plans to list on Wall St's tech heavy Nasdaq. The news followed the first announcement in May after unveiling its plans to list on another exchange. Shares closed 10.4 per cent higher at $10.36.


The Dow Jones futures are pointing to a fall of 1 points.
The S&P 500 futures are pointing to a rise of 7 points.
The Nasdaq futures are pointing to a rise of 61 points.
The SPI futures are pointing to a rise of 4 points when the market next opens.

Best and worst performers

The best-performing sector was materials, added 1.4 per cent while the worst performing sector was consumer discretionary, down 1.3 per cent.

The best-performing stock in the S&P/ASX 200 was Novonix (ASX:NVX) closing 10.8 per cent higher at $10.36, followed by shares in AGL Energy (ASX:AGL), and Magellan Financial Group (ASX:MFG).

The worst-performing stock in the S&P/ASX 200 was Reliance Worldwide (ASX:RWC) closing 3.4 per cent lower at $6.02, followed by shares in Lifestyle Communities (ASX:LIC), and Clinuvel Pharmaceuticals (ASX:CUV).

Asian markets

Japan's Nikkei is closed due to Coming of Age Day.
Hong Kong's Hang Seng has gained 0.8 per cent.
China's Shanghai Composite has gained 0.3 per cent.

Commodities and the dollar

Gold is trading at US$1792.31 an ounce.
Iron ore is 0.7 per cent lower at US$127.30 a ton.
Iron ore futures are pointing to a fall of 2.3 per cent.
Light crude is trading $0.08 higher at US$78.52 a barrel.
One Australian dollar is buying 71.94 US cents.

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