ASX bloodbath on Ukraine explosion shoots gold & oil higher, triggers 3% fall

Market Reports

by Melissa Darmawan

As Russia ordered military operations in Ukraine while world leaders slapped sanctions, surprised explosions triggered a bloodbath on the Australian sharemarket.

The local bourse plummeted to its worst one-day fall since September 2020 as investors piled into safe-haven assets. Treasuries and US dollars rallied while gold hit its highest level since January 2021, spilling over the US$1,940 an ounce as the price of oil rose to US$100 a barrel for the first time since 2014.

Gold miners rallied with Perseus Mining (ASX:PRU) soared 12.3 per cent to $1.785, Northern Star Resources (ASX:NST) rose 5.9 per cent to $10.59, while Newcrest Mining (ASX:NCM) closed 4 per cent higher at $25.60.

The pivot into government bonds pushed the yield on the Aussie 10-year treasuries lower by 11 basis points to 2.15 per cent, pushing prices higher while the US equivalent saw an equivalent performance.

The sector shoot-down triggered after investors heard that Russian President Vladimir Putin authorised a military operation in Ukraine. The sell-off saw every sector deep in the red, led by technology stocks, down 6.4 per cent, followed by materials by 4.3 per cent with resource heavyweights BHP (ASX:BHP), tumbling 6.9 per cent to $44.77 and Woodside Petroleum (ASX:WPL) down 2.7 per cent to $28.08 as they traded ex-dividend.

Investors have been grappling with an already uncertain landscape as global central banks mull over imminent interest rate hikes to suppress hot inflation. The escalating geo-political move has added further shockwaves, sending commodity prices soaring as risk was taken hastily off the table.

Market participants are concerned that if the Ukraine situation worsens, this could put a handbrake on the central banks’ path to normalisation with potential stagflation in sight.

Before the opening bell, market participants were digesting news that US intelligence warned of a Russian invasion in the next 24 to 48 hours, targeting Kyiv, the capital of Ukraine. The apparent plan is to ‘land grab’ and overthrow the Ukrainian government.

Elsewhere, engineering company CIMIC (ASX:CIM) was the best performer, skyrocketing 33.4 per cent to $22 after the company received a $22 per share takeover offer by its biggest shareholder and German construction group HOCHTIEF Australia. The bid was made at a 33 per cent premium to the company’s closing price on Wednesday, valuing the deal around $8 billion.

In earnings, Qantas (ASX:QAN) booked a half-year underlying loss before tax of $1.28 billion and trimmed its debt by $400 million to $5.5 billion. The flying kangaroo was cash flow positive in the last three months of calendar 2021, attributed to bookings resuming. Total flying was around 18 per cent of pre-pandemic levels during the half, with revenue losses increasing to more than $22 billion. Shares failed to take-off, closing 5 per cent lower at $5.08.

Elsewhere, Nine Entertainment Co (ASX:NEC) jumped 1.1 per cent to $2.74 after its first-half financial year 2022 earnings beat estimates. The news giant upgraded its full-year guidance thanks to strong free-to-air advertising market.

Print communications and marketing services for Coles, Westpac, and Bing Lee, IVE Group (ASX:IVE) surged 4.2 per cent to $2 after a beat across all metrics for the half year ending December 2021.

Meanwhile, investors glanced over 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 cast 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.

At the closing bell, the S&P/ASX 200 was 3 per cent or 215 points lower at 6,991.

Futures

The Dow Jones futures are pointing to a fall of 663 points.
The S&P 500 futures are pointing to a fall of 87 points.
The Nasdaq futures are pointing to a fall of 345 points.
The SPI futures are pointing to a fall of 158 points when the market next opens.

Best and worst performers

All sectors closed in the red. The sector with the fewest losses was Utilities, down 0.8 per cent. The worst-performing sector was Information Technology, down 6.4 per cent.

The best-performing stock in the S&P/ASX 200 was Cimic Group (ASX:CIM), closing 33.4 per cent higher at $22.00. It was followed by shares in Perseus Mining (ASX:PRU) and Northern Star Resources (ASX:NST).

The worst-performing stock in the S&P/ASX 200 was Life360 (ASX:360), closing 28.8 per cent lower at $4.68. It was followed by shares in Appen (ASX:APX) and Clinuvel Pharmaceuticals (ASX:CUV).

Asian markets

Japan's Nikkei has lost 2 per cent.
Hong Kong's Hang Seng has lost 3.4 per cent.
China's Shanghai Composite has lost 1.7 per cent.

Commodities and the dollar

Gold is trading at US$1940.15 an ounce.
Iron ore is 1 per cent higher at US$138.05 a ton.
Iron ore futures are pointing to a fall of 0.5 per cent.
Light crude is trading $4.14 higher at US$96.24 a barrel.
One Australian dollar is buying 71.93 US cents.

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