Tech sell-off resumes, House building approvals slide: ASX trading 0.2% lower at lunch

Market Reports

by Melissa Darmawan

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The tech rout resumes after Facebook parent Meta tanked over 20 per cent in after hours trade as the social networking platform missed Wall St’s expectations on its disappointing fourth quarter earnings. The woes transcended to the Australian sharemarket with the XJO falling to as low as 0.6 per cent, before staging a recovery in a bid to continue its two-day rally. Materials and the utilities sector attempted to soften the blow as the only two winning sectors in the green, while tech shares took the headlines as three worst performing stocks so far.

This comes after a volatile performance in January after tech shares failed many attempts to rally. Investors were reluctant to pile back into growth stocks, fuelled by looming interest rate hikes, putting pressure on valuations based on future profit growth as higher rates shrink the present value of those expected earnings.

The selling eased towards midday as fresh economic print from the Bureau of Statistics stabilized traders’ nerves.

December building approvals surged 8.2 per cent, seasonally adjusted versus a fall of 1.1 per cent expected by economists, driven by an increase in approvals for private sector dwellings excluding houses, which rose 27.4 per cent, though private sector house approvals remained subdued, falling 1.8 per cent in December, following a 1.6 per cent decline in November. While approvals for private houses have fallen from all-time highs, the series remains at historically elevated levels, with the December result 20.5 per cent higher than the pre-pandemic level in December 2019.

Meanwhile, the nation’s trade surplus reduced to $8.4 billion versus an expectation of $9.8 billion, while exports rose 1 per cent and imports increased by 4 per cent buoyed an increased demand in metal ores and minerals.

In company news, shares in Westpac (ASX:WBC) are galloping 2.4 higher at $21.09 after the bank delivered $1.8 billion in statutory net profits for the December quarter. The bank flagged a 3 year plan to decrease costs and unveiled its new management structure, but warned shareholders about the prospect of a shrinking net interest margin. Meanwhile, Commonwealth Bank of Australia (ASX:CBA) is the only major bank in the red, down 0.7 per cent at $94.09.

Commonwealth Bank (ASX:CBA) fell 1.4 per cent at $93.44 amid broker notes from Macquarie and UBS. The notes forecasted a year-on-year fall in revenue when it reports its first-half financial year 2022 results, with interest margin pressure and lower fee income expected to more than offset loan growth over the period. Macquarie cautions difficultly to estimate Commonwealth Bank of Australia's markets income, given disclosure is lacking relative to peers maintaining a rating of underperform rating and $88.50 target price.

Furniture chain Nick Scali (ASX:NCK) posted a 17.4 per cent tumble in its first-half profit to $33.5 million. Shares are trading 0.9 per cent higher at $14.53. Continued supply chain disruptions, rising freight costs and a slump in store traffic due to the Omicron variant of Covid-19 crushed its sales and earnings for the period, but customers are adjusting, as sales traffic improved towards the end of January.

Across the Tasman, New Zealand is set to reopen to the rest of the world at the end of this month after its borders were closed for almost two years.
At noon, the S&P/ASX 200 is 0.2 per cent or 13.10 points lower at 7074.60.

The SPI futures are pointing to a fall of 12 points.

Best and worst performers

The best-performing sector is materials, up 1.1 per cent. The worst-performing sector is information technology, down 5.3 per cent.

The best-performing stock in the S&P/ASX 200 is Nufarm (ASX:NUF), trading 12.7 per cent higher at $5.24. It is followed by shares in Insignia Financial (ASX:IFL) and Amcor (ASX:AMC).

The worst-performing stock in the S&P/ASX 200 is Novonix (ASX:NVX), trading 10.7 per cent lower at $6.88. It is followed by shares in Block (ASX:SQ2) and WiseTech Global (ASX:WTC).

Commodities and the dollar

Gold is trading at US$1807.41 an ounce.
One Australian dollar is buying 71.20 US cents.

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