Staff reporters
Updated ,first published
The Australian sharemarket has retreated at the open with Westpac leading the big four banks lower after its trading update.
The S&P/ASX 200 was down 29.1 points, or 0.3 per cent, to 9234.5 in early trade, with six of the 11 industry sectors in negative territory, led by financials as the banks dropped.
Westpac was 4 per cent lower after saying in its results that home loans have fallen 20 per cent since the May budget, when the government announced a tightening of tax concessions for property investors, as the banking giant’s profits moved higher.
The nation’s second-largest mortgage lender on Monday reported an unaudited net profit of $1.8 billion for the June quarter, up 3 per cent on the quarterly average for the March half. The other big banks also retreated, with ANZ losing 1.7 per cent, Commonwealth Bank shedding 1.1 per cent and National Australia Bank dropping 1.6 per cent.
Mining stocks were stronger in early trade, with ASX-listed Sunrise Energy Metals jumping 13 per cent after it was revealed the Pentagon will invest more than $500 million the company’s “world-first” mining project in central western NSW that produces scandium, a rare critical mineral used in fighter jets, spacecraft and other tools of war.
The $US400 million ($560 million) loan is intended to expand production at the Syerston Scandium Project near Fifield, south-west of Dubbo, as the US seeks to urgently diversify its supply chain for rare earths.
Rising prices in commodities boosted the whole materials sector, with BHP jumping 1.1 per cent, Rio Tinto adding 0.7 per cent and Fortescue rising 0.3 by per cent. Gold miners advanced higher, as the price of the precious metal jumped above $US4300 per ounce. Northern Star added 1.4 per cent and Evolution Mining gained 1.2 per cent in early trade.
Energy stocks dipped despite oil extending gains, as Iran and Oman remained short of a deal to reopen the Strait of Hormuz, while Houthi militants claimed an attack on a Saudi refinery near the Red Sea.
Brent traded above $US84 a barrel after climbing more than 5 per cent over the previous three sessions. West Texas Intermediate was near $US79 a barrel. Woodside Energy slipped 0.3 per cent, Santos edged down 0.1 per cent while the refiners also lost ground, with Ampol down 0.9 per cent and Viva Energy shedding1.5 per cent.
Australian technology stocks followed their Wall Street counterparts higher, with WiseTech and Xero both up 2.2 per cent, while Technology One added 1.2 per cent and NEXTDC 1.1 per cent.
Treasury Wine Estates gained 5 per cent on Monday morning after new chief executive Sam Fischer announced $558.4 million in writedowns, including $100 million of brand writedowns of Californian luxury label DAOU and Frank Family Vineyards, which was purchased for $1.6 billion in late 2023.
The wine giant will also leave some Californian vineyards unplanted to adjust to softer demand, sell more bulk wine, and continue its operational and strategic review of its Americas business.
“We are taking proactive and decisive action to align supply to a rigorous model of future demand against the backdrop of an evolving US wine market,” Fischer said.
The Australian dollar was trading at US70.68¢ at 10.21am AEST.
On Wall Street on Friday, the S&P 500 rose 47.68 points, or 0.6 per cent, to 7757.64. That topped the all-time high it set on Tuesday. The benchmark index has been on a record run throughout the year.
The Dow Jones rose 151.83 points, or 0.3 per cent, to 54,036.93. That put it just short of the record it set on Wednesday. The Nasdaq composite rose 342.26 points, or 1.3 per cent, to 26,690.62.
On Wall Street, technology stocks, with their big market values, did much of the heavy lifting for the broader market. Nvidia jumped 2.3 per cent and Broadcom rose 1.7 per cent.
The bond market reacted more strongly to the weaker signal on the jobs market, which can be seen as allowing the Federal Reserve more time before raising interest rates to fight inflation.
“Although the stock market is likely to welcome the dovish implications of the report, investors should be wary of the future growth potential of an economy where fewer people are working,” said Peter Graf, chief investment officer at Amova Asset Management Americas, in a research note.
Overall, the report paints a dimmer picture of the jobs market, which has been one of the brighter areas of the economy amid rising inflation and worries about household spending. It included a revision to the figures for June and May that involved slashing a combined 103,000 jobs from payrolls for those months.
The Fed has been holding interest rates steady amid worries about hotter inflation, fuelled by a rise in oil prices because of the US war with Iran. Wall Street expects at least one rate increase by the end of the year, with forecasts shifting for the next meeting. Expectations for a rate cut in September are down to 42 per cent, from 55 per cent and from 67 per cent a week ago, according to CME FedWatch.
Wall Street will get several important inflation updates next week. The most closely watched will be the consumer price index, or CPI, which measures costs for consumers. Wall Street expects it to show that inflation in July rose at a 3.4 per cent rate, which would be a slight easing from the 3.5 per cent rise in June. Inflation has held stubbornly above 3 per cent for most of the year.
Airbnb jumped 17.4 per cent following the vacation-rental company’s report that showed stronger profit and revenue for its most recent quarter than analysts expected.
With AP, Bloomberg
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