The Australian sharemarket has retreated from yesterday’s surge as investors climb the wall of worries around the prospect of interest rate hikes. Treasury yields extended its gains pressuring technology stocks lower, eclipsing the rally in energy, and material stocks.
Analysts are forecasting the US 10-year treasury yield to rise to 2 per cent amid the forecast of three rate rises this year. Investors are rotating out of growth into value stocks to dodge future pricing pressures.
The local bourse lifted at the open and declined towards midday with a mixed sectoral performance. A contrast from the yesterday after the local market jumped 2 per cent to mark its best performance since August 2021.
Following the US lead with the tech heavy Nasdaq tumbling, the XJO has followed suit with technology stocks down 2 per cent, followed by healthcare, and communication services, down 1.5 per cent. Utilities, and materials are bucking the trend along with energy stocks powering up by 0.5 per cent after OPEC+ agreed to increase output next month. Financials are also lifting by 0.5 per cent.
Buy now, pay later darling Afterpay (ASX:APT) is down 3.8 per cent recovering from lows of almost 5 per cent earlier in the session.
A mixed performance across the banks with ANZ (ASX:ANZ) as the outlier, down 0.1 per cent. Westpac (ASX:WBC) is leading by 0.8 per cent, followed by Commonwealth Bank (ASX:CBA), and National Australia Bank (ASX:NAB) both adding 0.5 per cent. Macquarie Bank (ASX:MQG) is extending its record high from yesterday adding 2.2 per cent.
Miners are firming up Fortescue Metals (ASX:FMG) rising 0.9 per cent, followed by a 0.8 per cent gain from both Rio Tinto (ASX:RIO), and BHP (ASX:BHP).
After OPEC+ agreed to increasing output next month, energy stocks are climbing. Santos (ASX:STO) adding 2.1 per cent, Origin Energy (ASX:ORG) is up 1.2 per cent, followed by
Woodside Petroleum (ASX:WPL) adding 0.5 per cent. Beach Energy (ASX:BPT) is flat.
Investors are piling into the precious metal gold players with Newcrest Mining (ASX:NCM) adding 0.6 per cent, Northern Star (ASX:NST) and Evolution Mining (ASX:EVN) both up 0.5 per cent.
Market participants have also been monitoring the climbing cases of Covid-19. Premier Dominic Perrottet admitted there was “substantial pressure” on the NSW health system after the state recorded 35,054 new cases and eight deaths. Victoria recorded 17,636 new cases, 11 deaths, Queensland reported 6,781 new cases. The moves follow the US after the country recorded over one million cases, a new record.
Performance on Japan’s Nikkei has been choppy while eyes will be on Chinese stocks after the Shanghai Composite snapped its two-day winning streak rising 1.2 per cent in the period. The US futures have slipped after the Dow reset its record high.
At noon, the S&P/ASX 200 is 0.3 per cent or 22 points lower at 7,568. The SPI futures are pointing to a fall of 45 points.
Local economic news
ANZ released its job advertisement figures in December which fell after two months of gains as Delta lockdown eased. Total job ads fell 5.5 per cent from an upwardly revised 17.2 per cent jump over the previous two months.
A record gain in the employment figure, up 366,100 in November was likely a significant factor behind the fall, but it can’t rule out some dampening effect from Omicron.
Job ads are 4.2 per cent above the pre-Delta-lockdown peak in June 2021 and 36.8 per cent above the pre-Covid level.
CIMIC’s (ASX:CIM) Leighton Asia has been awarded a $103 million contract to build a data centre campus for a technology firm in Indonesia. Construction is set to start this month and complete next year. Shares are trading 1 per cent higher at $17.15.
Marine services provider MMA Offshore (ASX:MRM) has recently been awarded a number of new contracts including two significant long-term vessel contracts to the value of $74 million. There is also a potential value in excess of $91 million if the relevant option periods are exercised. Shares are trading 12.5 per cent higher at $0.41.
Tyro Payments (ASX:TYR) welcomes two new board directors Claire Hatton and Shefali Roy starting today. Ms Roy was the chief operating officer and chief compliance officer at TrueLayer, while Ms Hatton spent seven years at Google Australia. Shares are trading 2.4 per cent lower at $2.85.
Best and worst performers
The best-performing sector is Utilities, up 0.5 per cent. The worst-performing sector is Information Technology, down 2 per cent.
The best-performing stock in the S&P/ASX 200 is Sims (ASX:SGM), trading 3 per cent higher at $17.27. It is followed by shares in Macquarie Group (ASX:MQG) and Adbri (ASX:ABC).
The worst-performing stock in the S&P/ASX 200 is Pro Medicus (ASX:PME), trading 6.5 per cent lower at $58.95. It is followed by shares in Clinuvel Pharmaceuticals (ASX:CUV) and Premier Investments (ASX:PMV).
Commodities and the dollar
Gold is trading at US$1813.56 an ounce.
Iron ore is 2.8 per cent higher at US$122.90 a ton.
Iron ore futures are pointing to a rise of 2.1 per cent.
One Australian dollar is buying 72.40 US cents.