China’s soft economic growth in the three months ending in June missed consensus as rolling Covid-19 lockdowns weighed on the economy. Demand slowdown has pushed prices of commodities from iron ore to copper, dragging local mining heavyweights on the Australian sharemarket.
At noon, the S&P/ASX 200 is 1.3 per cent or 85 points lower at 6,566.
Chinese gross domestic product growth advanced 0.4 per cent year-on-year versus a consensus of 1 per cent for the June quarter, according to the National Bureau of Statistics of China. Despite the soft growth, Beijing’s zero-Covid policy has sparked concern that another lockdown is imminent in a situation where weak demand for property continues to weigh.
The price of steel-making ingredient iron ore fell to an 8-month low, pushing Fortescue Metals (ASX:FMG) down by 5.2 per cent to $16.50, BHP Group (ASX:BHP) by 3.7 per cent to $36.02 and Rio Tinto (ASX:RIO) by 2.5 per cent to $93.61.
The decline in the materials sector and the fall in financials have offset the gains in consumer staples, healthcare, information technology and property.
Companies that have released updates have dominated the winners and losers circle. WiseTech Global (ASX:WTC) has taken first place on the ASX 200, soaring 4.1 per cent to $44.41 after upgrading its FY22 earnings forecast. Meanwhile, Pendal Group (ASX:PDL) has taken the bottom of the ladder, down 8.6 per cent to $3.73 after reporting that funds under management fell to $111 billion.
Macquarie Group (ASX:MQG), down 3.1 per cent to $165.71, is leading the major banks lower, while Woodside Energy (ASX:WDS), fell 4 per cent to $30.46, has weighed on the energy sector.
Elsewhere coal miners have retreated amid China deflecting questions about rumours on lifting an unofficial ban on Australian coal exports, while reiterating its position on “practical cooperation” with Australia, according to Bloomberg. Stanmore Resources (ASX:SMR) tumbled 4.7 per cent to $1.84, Terracom (ASX:TER) has fallen 2.7 per cent to 72.5 cents, New Hope (ASX:NHC) is down 0.5 per cent to $4.23 and Whitehaven Coal (ASX:WHC) is trading 0.4 per cent lower at $5.72.
Rio Tinto (ASX:RIO) has kept its 2022 iron ore guidance unchanged at 320 million tonnes to 335 million tonnes, subject to weather and market conditions. The guidance for bauxite and copper remain unchanged. Meanwhile, the guidance for alumina, aluminium, and diamonds were reduced. Shares are trading 2.5 per cent lower to $96.64.
WiseTech (ASX:WTC), a logistics technology company, upgraded its earnings guidance for financial year 2022. After achieving growth and cost efficiencies ahead of expectations, EBITDA guidance is set to land between $310 million to $320 million from $275 million to $295 million from the company’s February announcement. This represents an EBITDA growth of between 50 and 55 per cent compared to FY21. Shares are trading 4.1 per cent higher to $44.43.
BCI Minerals’ (ASX:BCI) managing director and chief executive officer (CEO), Alwyn Vorster has put in his resignation to step down by the end of the year. Mr Vorster has been in the role for more than six years and will be pursuing non-executive advisory roles, following his departure. The news comes a week after flagging higher costs and delays at the company’s flagship Mardie salt and potash project in Western Australia. The search for a new CEO is underway. Shares are trading 4.2 per cent lower to 23 cents.
Jumbo Interactive (ASX:JIN) has provided a double digit percentage uplift across its key metrics in its preliminary financial year 2022 results. The digital lottery company expects net profit to jump 16 per cent to $31.6 million, total transaction value to grow by 36 per cent to $660.1 million, revenue to climb 27 per cent to $103.8 million and EBITDA to be higher by 14 per cent to $54 million off the back of an improved jackpot cycle. Shares are trading 13.6 per cent lower to $12.51.
Michael Hill (ASX:MHJ) has posted record sales and improved margins for the 2022 financial year. All store sales were up 17 per cent and same store sales were up 2.1 per cent over the year. Shares are trading 3.7 per cent higher at $1.11.
Commodities and the dollar
Gold is trading at US$1713.47 an ounce.
Iron ore is 8.4 per cent lower at US$100.25 a tonne.
Iron ore futures are pointing to a fall of 7.2 per cent.
One Australian dollar is buying 67.56 US cents.