Staff writers
Updated ,first published
Australia’s stock market remains in the red after the latest unemployment data showed the jobless rate fell in May but not as much as many experts had expected, in a sign the job market is slowing.
The S&P/ASX 200 was down 38.5 points or 0.4 per cent at 8769.9 in early afternoon trade. The Australian Bureau of Statistics reported this morning that the unemployment rate has fallen from 4.5 percent to 4.4 percent.
Mining stocks are weak with BHP down 1.8 percent, Rio Tinto down 2.5 percent and Fortescue slipping 0.9 percent. Gold prices continued to weaken overnight, hurting local stocks, with Northern Star shedding 3.9 percent and Evolution Mining 4.8 percent lower.
Financial shares were mixed, with National Australia Bank the biggest mover of the four majors falling 2.7 percent. Commonwealth Bank rose 0.1 per cent, Westpac lost 0.3 per cent and ANZ Bank weakened 0.7 per cent. Shares in Judo Bank fell 38.9 percent after the business-focused lender warned of a rise in bad loans. Judo reported three exposures to customers in three different industries, and said the resulting “cost of risk” would be between $116 million and $122 million.
Energy stocks lost ground as oil prices continued to fall as the US and Iran discussed a possible end to their war. Brent crude, the global benchmark, fell overnight and lost another 1.7 percent in Asian trade to settle at $US72.47 a barrel. It has been trading below $US80 in recent days but is still above the roughly $US70 a barrel it was trading at in late February before the war broke out. US crude prices were 1.6 percent weaker at $US69.25 a barrel. Woodside Energy fell 3.1 percent and Santos lost 2.5 percent, while Yancoal fell 3.9 percent and Whitehaven Coal fell 3.5 percent. Among refiners, Ampol added 1.2 percent while Viva Energy rose 2 percent.
Local tech stocks were mixed, with Xero losing 3.5 percent, NEXT DC down 0.6 percent and WiseTech down 4 percent to continue a volatile week for stocks. First Technology was 3 percent higher.
The Australian dollar was trading at US68.97¢.
Immediately, technology stocks weighed on Wall Street again, but semiconductor company Micron’s forecast of $50 billion ($73.2 billion) in fourth-quarter earnings after the closing bell was higher than analysts’ expectations of nearly $US43 billion. A bullish outlook boosted US futures ahead of Thursday’s trade in New York as confidence in the intelligence trade was renewed.
Ahead of Micron’s results, declines in several tech heavyweights, including Microsoft, kept Wall Street lower even as most stocks in the S&P 500 rose.
The S&P 500 fell 0.1 percent. The Dow Jones, which is underweight in technology stocks, rose 0.4 percent. The Nasdaq composite was down 0.4 percent.
Microsoft’s 2.3 percent decline was the heaviest on Wall Street. Oracle fell 4.6 percent.
Google’s parent company Alphabet fell 0.2 percent. The company replaces Verizon in the Dow on Monday. A company’s inclusion in the S&P 500 means more to investors, however, because 401(k) accounts are more likely to include an S&P 500 index fund than anything linked to the Dow.
Alphabet will be the fifth Magnificent 7 company to join the Dow. The others are Apple, Amazon, Microsoft and Nvidia.
Some of the biggest winners on Wall Street include homebuilders following the passage of legislation beneficial to the industry. KB Home rose 16.7 percent and DR Horton jumped 6.7 percent.
The Federal Reserve is concerned about high inflation, which has been rising throughout the year as taxes raise the cost of various goods. The energy price shock due to the US-Iran war exacerbated inflation. Gasoline prices went up and transportation costs went up. The effect is expected to continue even if oil and gasoline prices fall.
The central bank will get an update on inflation on Thursday, when its preferred measure of prices is released. Economists expect the Personal Consumption Expenditures price index, or PCE, to show that prices rose 4.1 percent in May. That would be the highest rate in three years.
“Thursday’s PCE is set to take on significant value for markets, especially as Federal Reserve Chairman (Kevin) Warsh emphasized at last week’s meeting the central bank’s desire to achieve price stability,” wrote Rick Gardner, chief investment officer at RGA Investments, in a research note.
