Weakness in the Aussie market declined towards midday led by falls in consumer staples stocks and banks while bucking the trend are the healthcare and technology sectors. The local bourse is on track to close lower for a second day.
The moves come after the S&P 500 fell for its fifth day while dip buyers arrested the technology rout to see the tech-heavy Nasdaq eke out a miraculous gain. The index was close to correction territory after falling more than 9 per cent from its record high in November, with a late afternoon rally wiping off losses of 2.7 per cent in the session for Wall St’s mixed close.
The tumble in tech names followed US treasury yields marching higher last week triggered by concerns of an aggressive rate hike schedule by the Fed, a kryptonite for these growth stocks which make future earnings look less. The selling of government bonds which pushes yields higher is a symptom of market participants pricing in the interest rate hike in March as the Fed looks to trim its balance sheet after lift-off.
Traders read Goldman Sach’s note predicting four rate hikes this year to start in March after forecasting three rate hikes before. The 10-year treasury yield had a breather and closed steady at 1.76 per cent.
The baton was passed onto the local market here where the recovery in the technology sector has begun, as they notch the 2nd best performing sector with mild gains of 0.4 per cent while healthcare is a hairline higher rising 0.5 per cent.
Afterpay (ASX:APT) is trading 2.3 per cent after Block on Wall St rallied, Zip Co (ASX:Z1P) is up 2.1 per cent, while Zero (ASX:XRO) is up 0.4 per cent.
Consumer staples is the worst performing sector dragged down by Inghams (ASX:ING) after the chicken producer felt the pain from the Omicron wave across the east side of the country. Staff shortages have put downward pressure on its sales performance and led to several products being suspended amid the supply chain disruptions. Shares are trading 6.5 per cent lower at $3.30.
Supply chain concerns and staff shortages dragged on retailers yesterday as the Omicron wave continues to dent consumer sentiment and spend. Woolworths is (ASX:WOW) trading 1.7 per cent lower, Coles (ASX:COL) lost 1.4 per cent, while Wesfarmers (ASX:WES) is down 1.2 per cent. Elsewhere JB Hi-Fi (ASX:JBH) is flat after yesterday’s 2.4 per cent tumble, while Harvey Norman (ASX:HVN) has dipped 0.2 per cent.
Financials are the second worst performer with major banks lower with Commonwealth (ASX:CBA) and Macquarie (ASX:MQG) both tumbling 2 per cent, ANZ (ASX:ANZ) is trading 1.3 per cent lower, NAB (ASX:NAB) has fallen 1.1 per cent while Westpac (ASX:WBC) is down 0.5 per cent.
Resource stocks have fallen on weakness in commodity prices with Santos (ASX:STO) tumbling 1.6 per cent while Woodside Petroleum (ASX:WPL) down 0.8 per cent. BHP (ASX:BHP) are leading the declines, down 1.2 per cent, Rio Tinto (ASX:RIO) lost 0.4 per cent, while Fortescue Metals (ASX:FMG) is bucking the trend rising 0.9 per cent.
Gold stocks are rallying after the firmer precious metal price as investors seek refuge as an inflation hedge. Evolution Mining (ASX:EVN) has jumped 2.7 per cent, St Barbara (ASX:SBM) is up 0.8 per cent and Newcrest Mining (ASX:NCM) is trading 0.7 per cent higher.
Meanwhile, as traders were waiting for fresh economic data on retail trade, Covid-19 numbers continued to make headlines with 65,243 cases, 24 deaths, 3,065 in hospital, 287 in ICU as of today, after the 100,000 new record from yesterday. Modelling shows that the peak of cases is expected towards the last week of this month. In Asian markets, Japan’s Nikkei is weaker after resuming trade.
At noon, the S&P/ASX 200 is 0.5 per cent or 33 points lower at 7,414.
The SPI futures are pointing to a fall of 27 points.
Local economic news
The Australian Bureau of Statistics (ABS) posted retail sales rising 7.3 per cent in November, seasonally adjusted from 4.9 per cent a month before versus expectations of 3.8 per cent.
Meanwhile, the balance of goods and services surplus fell $1,4 billion to $9.5 billion in November versus expectations of $10.6 billion with imports up 6 per cent to $43.859 billion while exports grew 2 per cent to $34.436 billion according to the ABS.
ANZ-Roy Morgan consumer confidence dropped 2.4 points to 106.0 during the first week of January, and is now 2.9 points below the same week a year ago. The small drop in sentiment follows a surge in Omicron cases over the last few weeks causing many problems for businesses with staff forced to isolate. The surge in cases has likely contributed to the small decline in sentiment which normally increases to start the new year.
Sales in biotech giant PolyNovo (ASX:PNV) have surged 45 per cent to $16.3 million from a year ago, led by encouraging sales in the US. The company is now focusing on initiatives in markets outside the US after describing its sales performance as “patchy”. Shares are galloping 18.2 per cent higher at $1.69.
Liontown Resources (ASX:LTR) are in trading halt pending an announcement. The move comes after they inked a deal yesterday for a contract worth $10 million for its Kathleen Valley Lithium Project in WA. Shares last traded at $1.55.
Best and worst performers
The best-performing sector is health care, up 0.5 per cent. The worst-performing sector is consumer staples, down 1.5 per cent.
The best-performing stock in the S&P/ASX 200 is PolyNovo (ASX:PNV) trading 19.2 per cent higher at $1.71, followed by shares in PointsBet Holdings (ASX:PBH), and Evolution Mining (ASX:EVN).
The worst-performing stock in the S&P/ASX 200 is Inghams Group (ASX:ING), trading 7.4 per cent lower at $3.27, followed by shares in Novonix (ASX:NVX), and ARB Corporation (ASX:ARB).
Commodities and the dollar
Gold is trading at US$1803.25 an ounce.
Iron ore is 0.7 per cent lower at US$127.30 a ton.
Iron ore futures are pointing to a rise of 1.1 per cent.
One Australian dollar is buying 71.86 US cents.