Aussie shares fell for a seventh session as a collapse in the prices of major exports added to headwinds for the domestic economy.
The S&P/ASX 200 dropped 41 points or 0.64 per cent to a fresh 19-month low.
Early indecision gave way to selling as iron ore and coal prices slumped in China. Declines in miners, energy producers and utilities outweighed gains for banks, property and health stocks.
What moved the market
Hopes for a relief rally after two weeks of heavy selling were doused by sharp declines on commodity markets. Iron ore and coking coal prices dived 9.4 per cent this afternoon on China’s Dalian Commodity Exchange.
The slump followed reports steel mills were reducing output due to weak demand and shrinking margins.
“Authorities announced last week that Shanghai residents will be tested every week while temporary lockdowns will be placed on residential complexes where coronavirus cases are detected. Soft demand for steel is forcing mills to extend maintenance periods in areas such as Tangshan. Inventories of finished steel products are also rising,” ANZ senior commodity strategist Daniel Hynes said.
Today’s declines compounded commodity losses last week. Iron ore fell to a six-month low on Friday. Copper dropped below US$10,000 a tonne at the end of its worst week since October. Crude oil lost almost 10 per cent for the week.
The declines ensured a torrid start to the week for major bulk metal, coal and energy producers. Fortescue Metals slumped 8.6 per cent to a three-month low. BHP shed 5.32 per cent. Rio Tinto retreated 5.06 per cent.
In the energy space, Santos dived 6.03 per cent. Woodside gave up 4.86 per cent. Among coal miners, New Hope lost 12.53 per cent, Stanmore Resources 9.59 per cent, Whitehaven 9.2 per cent and Coronado 9.86 per cent.
The falls helped drive the dollar back under 70 US cents. The Aussie was lately trading off session lows at 69.67 US cents.
Commodity pressure overshadowed a better end to a challenging week on Wall Street. The S&P 500 bounced 0.22 per cent on Friday. Europe’s Stoxx 600 index edged up almost 0.1 per cent.
“US and European equities showed sign of stabilisation on Friday, but still ended with sharp declines on the week. Sentiment was not helped after Fed Chair Powell said the Fed has unconditional commitment to restoring price stability,” NAB currency strategist Rodrigo Catril said.
Banks lined up this morning to predict a US recession next year. Commonwealth Bank, ANZ and Japanese giant Nomura all issued notes saying the US economy will enter a recession in 2023.
An earnings upgrade from retail property giant Vicinity Centres helped lift the REIT sector off a 19-month low. Shares in the shopping centre operator firmed 6.32 per cent after it raised its full-year outlook for funds from operations.
HomeCo bounced 5.56 per cent, Stockland 4.24 per cent and Scentre Group 4.82 per cent. Shopping Centres Australasia gained 2.24 per cent after acquiring five neighbourhood shopping centres from Primewest for $180 million.
Transurban bounced 2.2 per cent on news shareholders will receive a distribution of 26 cents per share for the six months to June 30.
A rebound in the heavyweight banks mostly petered out by the close. CBA bounced 0.33 per cent from a 14-month low. ANZ firmed 1.09 per cent. NAB tacked on 0.54 per cent. Westpac finished flat.
Other heavyweights to advance included Goodman +3.39 per cent, Wesfarmers +3.01 per cent and CSL +2.75 per cent.
A cash injection from a new investor lifted PointsBet 18.6 per cent. Financial trading firm SIG Sports Investment paid $94.2 million for 38,750,000 PBH shares at a premium to recent prices. The 12.8 per cent stake makes SIG the largest shareholder in the gaming group.
The battle for control of Infomedia hotted up with a third suitor entering the fray. Shares in the automotive software-as-a-service provider jumped 7.38 per cent to $1.60 after Solera Holdings offered $1.70 per share. The company was already weighing conditional non-binding indicative proposals from Battery Ventures and a consortium led by TA Associates.
While the commodity majors did most of the damage to the index, the falls extended all the way down the food chain. Chalice Mining shed 9.51 per cent, Champion Iron 11.94 per cent and Beach Energy 8.28 per cent.
Paladin Energy lost 13.08 per cent. Karoon Energy trimmed an opening double-digit dive to a loss of 4.3 per cent.
APA Group eased 0.89 per cent after inking a deal to build and operate a 20km gas link between the Hunter Valley and an existing pipeline to Sydney. APA will own and operate the Kurri Kurri Lateral to the Hunter Power Project, as well as a gas storage facility.
A downgrade from UBS helped push Bega Cheese down 8.05 per cent. The broker cut its 2023 earnings forecast, citing increased cost pressures.
Shipbuilder Austal dipped 1.89 per cent after winning contracts worth more than $300 million from the Royal Australian Navy, United States Navy and Government of Trinidad and Tobago.
Asian markets turned mixed in afternoon trade. The Asia Dow dropped 0.43 per cent. Japan’s Nikkei declined 1.05 per cent. China’s Shanghai Composite swung to a gain of 0.16 per cent. Hong Kong’s Hang Seng rose 0.15 per cent.
US futures turned higher ahead of tonight’s market holiday. S&P 500 futures rallied seven points or 0.18 per cent.
Brent crude reversed higher in afternoon trade. Brent futures were lately up 62 cents or 0.55 per cent at US$113.74 a barrel.
Gold firmed US$4.70 or 0.26 per cent to US$1,845.30 an ounce.