Defensive play emerges on renewed recession fears: ASX closes 1.1 lower

Investors turned defensive after recession fears emerged amid rising Covid cases in China. This comes ahead of a big week of economic news and input data that could reinforce central banks’ race to hike interest rates to tame hot inflation.

At the closing bell, the S&P/ASX 200 was 1.1 per cent or 76 points lower at 6,602.

Healthcare eked out a gain of 0.1 per cent while the rest of the sectors fell, with materials and information tech slumping 2.8 per cent and 2.5 per cent respectively. The other sectors fell in the range of around 0.5 to 2 per cent.

Renewed fears of a global recession returned to the front of investors’ minds ahead of the US consumer price index data for June, which is expected to come in at 8.8 per cent year-over-year.

This is after the headline US jobs data for May came in better-than-expected, though with a weaker participation rate and average hourly earnings. This means that there was job growth without wages growth which might not be what the central bank wants to see, however, it suggests that inflation could be easing. Despite the mixed figures, economists said that the news has given the green light for the US Federal Reserve to deliver another 75 basis points this month.

Rising virus cases throughout China have raised fears about the potential for wider lockdowns in the country. This meant that copper’s rally was short-lived. Oz Minerals (ASX:OZL) tumbled 4.3 per cent to $16.89 and Sandfire Resources (ASX:SFR) fell 4.4 per cent to $4.14, while Culpeo Minerals (ASX:CPO) and Solis Minerals (ASX:SLM) both closed over 6 per cent lower.

Elsewhere, Costa Group (ASX:CGC) was placed into a trading halt. The fresh fruit and vegetable grower flagged quality issues due to weather events occurring over recent weeks.

EML Payments (ASX:EML) crashed 24.6 per cent to 96 cents as the worst performer on the ASX 200 following news of the sudden departure of chief executive Tom Cregan. Meanwhile, New Hope Corporation (ASX:NHC) was the best performer on the ASX 200, and jumped 4.7 per cent to close at $3.77.

Macquarie Group (ASX:MQG) led the falls in the major banks, down 1.7 per cent at $167.85, while Westpac Banking Corporation (ASX:WBC) and Commonwealth Bank of Australia (ASX:CBA) closed flat.

Gold miners also fell. Evolution Mining (ASX:EVN), Northern Star (ASX:NST), and Newcrest Mining (ASX:NCM) fell in the range of 3 to 5 per cent. 

Company news

Telix Pharmaceuticals (ASX:TLX) has announced that it has dosed the final patient and completed recruitment into the Phase III pivotal study ZIRCON (Zirconium in Renal Cancer Oncology, NCT03849118) of its investigational renal (kidney) cancer imaging agent TLX250-CDx ( 89Zr-DFO-girentuximab). This global study has dosed 300 patients to date, exceeding the target enrolment of 252 patients, announced on 8 March this year. Shares closed 0.4 per cent lower at $5.45.

Westgold Resources (ASX:WGX) has executed a new Electricity Purchase Agreement with independent power provider Pacific Energy and a new LNG Supply Agreement with Clean Energy Fuels Australia. Shares closed 2.5 per cent lower at $1.15.

Anson Resources (ASX:ASN) has unveiled a 25 per cent increase in lithium grade over previously reported assays at the Paradox Lithium Project, in Utah, USA. This provides a strong indicator of the upside potential in the planned upcoming JORC Resource upgrade. Shares closed flat at 11 cents.

RPM Automotive Group (ASX:RPM) has beefed up its portfolio by completing a $2.4 million acquisition of AFT Automotive Group. Shares closed flat at 28 cents.

First four RC drill holes of the second RC program at Galileo Mining’s (ASX:GAL) Callisto palladium discovery have returned significant palladium platinum-gold-copper-nickel assays at their Norseman project in Western Australia. Shares closed 5.9 per cent higher at $1.35.

Link Administration (ASX:LNK) has added 0.3 per cent to $4.03 as the company continues to hold its ground around rejecting Canadian suitor Dye & Durham’s revised $4.57 per share takeover offer. The company has also said that full-year results to the end of June came in slightly above guidance. Link’s revenue was $1,175 million, its operating EBITDA was $250 million and its operating EBIT was $152 million.
 
Futures

The Dow Jones futures are pointing to a fall of 247 points.
The S&P 500 futures are pointing to a fall of 37 points.
The Nasdaq futures are pointing to a fall of 152 points.
The SPI futures are pointing to a fall of 78 points when the market next opens.

Asian markets

Japan’s Nikkei has gained 1.1 per cent.
Hong Kong’s Hang Seng has lost 3.1 per cent.
China’s Shanghai Composite has lost 1.6 per cent.

Commodities and the dollar

Gold is trading at US$1,740.32 an ounce.
Iron ore is 0.7 per cent lower at US$114.05 a ton.
Iron ore futures are pointing to a fall of 3.7 per cent.
Light crude is trading $1.28 lower at US$92.00 a barrel.
One Australian dollar is buying 68.11 US cents.