ASX slumps 2.5% for its worst day this year, BHP trades ex-div, Qantas fails to take-off at noon

Market Reports

by Melissa Darmawan

A flood of news poured onto investors' plate as the Australian sharemarket slumps on its final days of February, to a three week low after celebrating a three week winning streak.

Slump in slump

Trading ex-dividend is the nation’s largest weight on the local bourse, BHP (ASX:BHP), wiping the share price lower by 6.4 per cent to $45.

The loser’s circle includes companies whose results came in at a miss which included Appen (ASX:APX) cratered over 24 per cent to $6.48, City Chic (ASX:CCX) tumbled over 32 per cent to $3.43, Life360 (ASX:360) crashed over 31 per cent to 4.56 and Qantas Airways (ASX:QAN) tanked 3.2 per cent to $5.18.

Other drags on the index include Block (ASX:SQ2), tumbling 10 per cent to $119.89 while Reece (ASX:REH) is trading over 4.7 per cent lower to $19.25.

US & European futures, pointing lower

US and European futures are not giving any glimmer of hope with falls across the board except the FTSE 100, trying to hold onto the green.

The tune has pivoted from the Covid-19 pandemic to geo-political tensions as investors comb through company earnings which has been a saving grace, cushioning the fall in recent times.

Private capital expenditure disappoints

Other than following headlines on the mounting tension between Russia and Ukraine are the disappointing fourth quarter results for private capital expenditure, falling to 1.1 per cent from 2.2 per cent the quarter prior versus expectations of 2.5 per cent as per the Australian Bureau of Statistics.

Before the Omicon wave, Australian businesses from construction to mining boosted their spending plans, providing an optimistic outlook for the economy. These CAPEX figures provide a further case of dovishness from the RBA after slightly softer wage growth this week. The fresh economic print has casted a further doubt on the pace of tightening from the central bank who are set to meet next Tuesday, ahead of the GDP figures on Wednesday.

Hawk or dove?

Elsewhere, speculation that the Fed may soften their hawkish tone in response to economic uncertainty between Russia and Ukraine appears to have impacted the bond market’s view of rate hikes this year. The bet for a 50 basis point hike in March is likely to look like 25 basis points amid this. Some market analysts pose that there's an increased risk of slowing, or a pause in consumer and corporate spending if uncertainty and tension over a war in Ukraine increases.

Meanwhile, shares in CIMIC (ASX:CIM) soared over 34 per cent to hit their highest in more than four months as the best performer. The construction firm received a $1.5 billion bid from Hochtief for the remaining 21.4 per cent stake. The bid was made at a 33 per cent premium to the company’s closing price, valuing the deal at about $8 billion.
 
At noon, the S&P/ASX 200 is 2.5 per cent or 181.40 points lower at 7024.30.

The SPI futures are pointing to a fall of 120 points.

Best and worst performers

All sectors are in the red. The sector with the fewest losses is consumer staples, down 0.3 per cent. The worst-performing sector is information technology, down 4.7 per cent.

The best-performing stock in the S&P/ASX 200 is Cimic Group (ASX:CIM), trading 33.4 per cent higher at $22.00. It is followed by shares in Perseus Mining (ASX:PRU) and Nextdc (ASX:NXT).

The worst-performing stock in the S&P/ASX 200 is Life360 (ASX:360), trading 31.1 per cent lower at $4.53. It is followed by shares in Appen (ASX:APX) and Clinuvel Pharmaceuticals (ASX:CUV).

Commodities and the dollar

Gold is trading at US$1913.33 an ounce.
Iron ore is 1.0 per cent higher at US$138.05 a ton.
Iron ore futures are pointing to a rise of 0.14 per cent.
One Australian dollar is buying 72.05 US cents.

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