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ASX falls after Wall Street tech sell-off
By Brittany Busch
Welcome to your five-minute recap of the trading day.
The numbers
The ASX pared back some of the early losses on Monday but still closed in the red after weaker than expected monthly job data out of the US had intensified a tech stock sell-off on Wall Street on Friday.
The S&P/ASX 200 dropped 25.3 points, or 0.3 per cent, to 7988.1 at the close. Six of the11 industry sectors traded in the red. Consumer discretionary and healthcare stocks were the biggest losers of the session.
Wall Street wrapped up its worst week in over a year with more heavy losses.Credit: AP
The lifters
Lynas Rare Earths (up 4.1 per cent) and Treasury Wine Estates (up 3.1 per cent) were among the biggest large-cap gainers. Miner Yancoal soared 4.5 per cent, bolstered by an announcement it will be added to the benchmark S&P/ASX 200 index for the first time from September 23.
Mexican-themed restaurant chain Guzman y Gomez was up 4.8 per cent after a promising rise following its float in June. Gold miner Westgold Resources (down 3.5 per cent) will also join the index.
The quarterly rebalance of the S&P/ASX 200 index will remove property marketplace Domain, Strike Energy and medical device company Nanosonics.
In mining, sector heavyweights BHP and Fortescue gained 0.8 per cent and 0.5 per cent respectively, despite iron ore prices falling below $US90 a tonne for the first time in 22 months on Monday. Rio Tinto dipped 0.2 per cent.
The laggards
The big four banks all closed less than 1 per cent lower. Westpac closed 0.7 per cent weaker following the announcement its chief executive Peter King would retire after nearly five years at the helm.
Large-cap Steadfast Group froze trading just before midday after plummeting 6 per cent at the open. The halt followed reports from the ABC that the insurance broker had withheld information from clients on cheaper insurance alternatives from rival companies.
In retail, Premier Investments fell nearly 3.9 per cent after announcing the firing of John Cheston, managing director of popular stationery brand Smiggle.
“The Just Group board considers that Mr John Cheston has engaged in serious misconduct and a serious breach of his employment terms and on that basis his employment has been terminated today,” the company said in a statement on Monday morning.
Cheston is due to start as chief executive at youth accessories brand Lovisa in the middle of next year. Its share price slid 4.5 per cent at the close.
In a separate statement, Premier Investments posted soft results for the 2024 financial year, and other stocks reflected the challenging consumer discretionary market. JB Hi-Fi (down 1.7 per cent), Wesfarmers (down 0.8 per cent) and Harvey Norman (down 1.1 per cent) all edged down.
Domino’s Pizza shares fell 3.1 per cent as the fast-food chain prepared to defend accusations from a class action lawsuit of misleading and deceptive conduct, and of failing to fully disclose poor international performance to investors.
Evolution Mining rounded out the biggest large-cap losers, dropping 3 per cent.
The lowdown
BetaShares chief economist David Bassanese said the ASX tracked Wall Street’s Friday dive but that it had managed to shrug off the worst lows because of the local bourse’s lesser reliance on tech stocks.
“It’s largely a flow through from the weakness of Wall Street on Friday. We’re getting these sporadic US recession concerns, and so our market’s been caught up in that,” Bassanese said.
“The Friday numbers were soft in one sense, and employment was weaker than expected, but the unemployment rate actually ticked down to 4.2 from 4.3 so it wasn’t weak enough to suggest that the Fed would cut rates by 50 points next week.
“The markets seem disappointed by that mixed report. On the one hand, the markets would like to see the Fed cutting by 50 points next week, but on the other hand, they don’t want it to be a reaction to very weak economic data.”
“The other element of this is that it’s not just US recession concerns, it’s a reappraisal of the valuations of US tech companies, particularly Nvidia, which less affects Australia because technology is a smaller share of our market. So that’s helping in stemming the slide in Australia, versus what we’ve been seeing in the US of late.” he added.
On Wall Street on Friday, the S&P 500 and the Dow had their biggest weekly drop since March 2023. The Nasdaq registered its biggest weekly drop since January 2022.
Losses in megacap “Magnificent Seven” stocks dragged the bourse, including Tesla (down 8.4 per cent), Nvidia (down 4 per cent), Google owner Alphabet (down 4 per cent) and Meta (down 3.2 per cent).
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Quote of the day
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With Reuters
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