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ASX drops as banks, miners fall
By Millie Muroi
The country’s biggest sectors dragged down the Australian sharemarket on Friday, as heavyweights BHP and Commonwealth Bank took a dive and as Wall Street fell overnight.
The S&P/ASX 200 was down 21.6 points, or 0.3 per cent, to 7,340.6 about midday, even as energy and industrials traded firmly in the green.
The big banks and miners are weighing down the ASX on Friday.Credit: Louie Douvis
The materials sector (down 1 per cent) dragged down the local bourse as heavyweights BHP (down 1.8 per cent), Fortescue (down 2.1 per cent) and Rio Tinto (down 2.2 per cent) declined after the iron ore price fell 1.9 per cent overnight and BHP flagged output cuts.
Financials (down 0.7 per cent) were also down, as Australia’s largest banks including CBA (down 1 per cent), NAB (down 1.1 per cent) and Westpac (down 1.1 per cent) all fell. Bendigo and Adelaide Bank was the biggest large-cap decliner, shedding 2.3 per cent.
Energy companies (up 1 per cent) pared back earlier losses with Woodside lost adding 0.6 per cent despite posting a 16 per cent drop in revenue in the March quarter and facing a 2.4 per cent drop in Brent crude oil prices.
Coal miner Whitehaven (up 3.8 per cent) led the large-cap advancers followed by Lynas Rare Earths (up 2.9 per cent) – which posted a 9 per cent increase in sales revenue in the March quarter – and industrial chemical manufacturer Incitec (up 2.6 per cent).
Stocks on Wall Street fell following mixed earnings reports from big companies and more signals the US economy may be slowing.
The S&P 500 fell 0.6 per cent after drifting listlessly earlier this week. The Dow Jones slipped by 0.3 per cent while the Nasdaq composite dropped by 0.8 per cent.
Tesla weighed heavily on the market for a second straight day on worries about how much profit it’s making on each of its electric vehicles. It dropped 9.7 per cent after reporting revenue for the first three months of the year that fell short of analysts’ expectations as it repeatedly cut prices on its models.
Tesla’s cutting prices “is good for inflation,” said Rob Haworth, senior investment strategist at US Bank Wealth Management. “But for the market, the question has to be: You’re cutting prices again, it seems like we’re not seeing enough demand on the auto side.”
Tesla weighed heavily on the market for a second straight day on worries about how much profit it’s making on each of its electric vehicles.Credit: Bloomberg
“It’s still working its way through the system, higher rates for everyone. It’s more costly to buy a car, more costly to buy a house from a financing perspective.”
AT&T sank 10.4 per cent after it reported slightly weaker revenue than analysts forecast, though profit squeaked past expectations. Analysts also pointed to weaker cash flow than some expected. It was the worst day for its stock in two decades and its second-worst since late 1983.
In the bond market, yields fell following a couple of reports on the US economy.
Slightly more workers filed for unemployment benefits last week than the week before, a potential signal that a still-strong job market is starting to soften under the weight of much higher interest rates.
A separate report said that manufacturing trends in the mid-Atlantic region weakened by much more than economists expected.
They helped drag the yield of the 10-year Treasury down to 3.53 per cent from 3.59 per cent late Wednesday. The two-year yield, which more closely tracks expectations for the Federal Reserve, fell to 4.14 per cent from 4.25 per cent.
Broadly, the majority of companies have been topping profit forecasts so far in the early days of this reporting season. That’s likely in large part because expectations were quite low coming into it.
Analysts were forecasting this would mark the sharpest drop in S&P 500 earnings per share since the pandemic was pounding the economy in 2020. Profits are under pressure as inflation remains high, interest rates are much higher than a year ago and portions of the economy slow.
With AP
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