“What we’ve seen a return to is, unfortunately, a bit of negative sentiment around the overall broader health of the Chinese economy. And that’s flowed through of course to iron ore,” said Elio D’Amato, managing director of Spotee Connect.
“You’ve got a bit of a perfect storm here. We’re getting a whole lot of [quarterly updates] at the moment in regards to mining stocks, and all of them tell the same narrative — that costs are going up.”
D’Amato added that while the economic data was not pointing towards businesses “falling off a cliff”, many investors were preparing for a possible downturn.
“It feels like the market at the minute is more governed by sentiment and headlines that it is by anything really factual,” he said. “Everyone’s a bit gun shy, no one’s keen to buy the dip.”
Shares in Macquarie Group jumped 2.3 per cent to $2 after the investment banking giant reported an interim net profit of $2.3 billion, down 13 per cent over 6 months, while assets under management rose 3 per cent to $795.6 billion.
Analysts said a highlight in the result was the better-than-expected performance of its commodities and global markets division, where the bank said it had profited from clients hedging in the gas, power and oil industries.
With more than 70 per cent of income in the past six months coming from outside Australia, S&P Global Ratings analysts said the group’s global footprint would likely underpin ongoing growth in the well-diversified firm.
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The results helped the financials sector recover some of the losses inflicted on Thursday, when the ASX added 0.5 per cent to notch up its fourth straight day of gains.
The Australian dollar weakened overnight and was fetching 64.6 US Cents at 5.30 pm AEDT.
On Wall Street overnight, the S&P 500 fell 0.6 per cent, with about 44 per cent of stocks within the benchmark index losing ground. The tech-heavy Nasdaq fell 1.6 per cent, while the Dow Jones Industrial Average rose 0.6 per cent.
Facebook’s parent company, Meta Platforms, plummeted 24.6 per cent for the biggest drop in the S&P 500 after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok.
It joined other tech and communications stocks, such as Google’s parent company, Alphabet, and Microsoft, in reporting weak results and worrisome forecasts over advertising demand.
Another pullback in long-term Treasury yields helped support stocks in companies that weren’t reporting quarterly results.
“What you’re seeing is a bit of relief,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “Earnings are not great but they’re not awful either.”
Tweet of the day:
Quote of the day: “These negotiations or consultations with the government for many employer groups have been like wrestling with smoke.” Australian Industry Group head Innes Willox said the federal government was yet to begin consulting industry over its Secure Jobs, Better Pay industrial reform bill.
You may have missed: Treasurer Jim Chalmers has appointed John Lonsdale as the new chair of the Australian Prudential Regulation Authority (APRA), which oversees the banking, insurance and superannuation industries. Promoted from deputy chair, Lonsdale will officially take the helm on Monday, at a time when banks are dealing with a raft of challenges including rising interest rates, digital disruption, cyber threats and climate change.
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