Jobless rate to 3.9%, Aristocrat jumps as retailers tumble, inflation haunts: ASX dives 1.5% at noon

Consumer staples and discretionary stocks are leading the dive on the Australian sharemarket, shrugging off the improved labour market and giving back three days of gains.

Bunnings and Target owner Wesfarmers (ASX:WES) has dropped 6.6 per cent to $46.52. Woolworths (ASX:WOW) is down 6.2 per cent to $34.96, Metcash (ASX:MTS) is off 4.8 per cent to $4.39 and Coles (ASX:COL) is trading 3.5 per cent lower to $17.81.

Healthcare stock Imugene (ASX:IMU) is the best performer, up 8.8 per cent to 18.5 cents followed by Aristocrat Leisure (ASX:ALL), up 4.4 per cent to $32.99. Beaten down tech stocks continue to struggle with Novonix (ASX:NVX), and Life360 (ASX:360) down 6.4% and 7.4% respectively.

Webjet (ASX:WEB) returned to profitability in the year ending in March. However the results fell short of consensus estimates due to corporate costs coming in 16 per cent higher at $15.6 million in the period with RBC capital market analyst Wei-Weng Chen warning of a further 22 per cent upside to costs in financial year 2023. Shares are trading 2.9 per cent lower at $5.63.

Boral (ASX:BLD) shares are seeing extra downward pressure amid several broker downgrades. Credit Suisse cut its rating to an underperform from neutral and slashed its price target to $2.60 from $3.80. The broker notes the $45 million downgrade to the company’s full year earnings guidance, excluding property, flags poor pricing power in the current inflationary landscape. Of this, thirty million dollars is being attributed to the rainfall on the eastern part of the nation, with the balance due to surging energy costs which realised prices are unlikely to fully offset. Shares are trading 4.2 per cent lower at $2.98.

Fortescue Metals Group (ASX:FMG) is pulling the iron ore miners lower by 2.1 per cent at $19.37, BHP Group (ASX:BHP) is down 1.6 per cent at $46.28, while Rio Tinto (ASX:RIO) is trading 1.8 per cent lower at $106.91. Energy stocks are also in negative territory, with Beach Energy (ASX:BPT) and Woodside Petroleum (ASX:WPL) down between 3 and 5 per cent.

There are a few bright spots. Aristocrat Leisure (ASX:ALL) posted a 41 per cent rise in normalised profit after tax and before amortisation of $562 million from a year ago, beating Bloomberg’s estimate by more than 16 per cent. Aristocrat plans to return up to $500 million to investors through an on-market share buyback, after raising $1.3 billion for its failed takeover bid of UK gaming software company Playtech. Eligible shareholders are set to receive an interim dividend of 26 cents per share in July, almost 75 per cent up from the year before. Shares are trading 3.5 per cent higher at $32.69.

Arafura Resources (ASX:ARU) shares soared 14.3 per cent to 40 cents after the company inked a non-binding memorandum of understanding with Hyundai.

At noon, the S&P/ASX 200 is 1.5 per cent or 110 points lower at 7,073. The SPI futures are pointing to a fall of 103 points.

Local economic news

Seasonally adjusted unemployment came in at 3.9 per cent in April 2022, unchanged from a downwardly revised figure in March and matching market expectations. The latest reading remained at its lowest level since the series began in 1978, amid a steady recovery in the economy from the pandemic, according to the Australian Bureau of Statistics. There were 4,000 new jobs added to a record peak of 13.4 million, below market forecasts of 30,000, as full-time employment increased by 92,400 to 9,342,900 while part-time employment fell 88,400 to 4,058,800. The participation rate inched down to 66.3 per cent compared with estimates of 66.4 per cent.

Best and worst performers

The best-performing sector is health care, up 0.3 per cent. The worst-performing sector is consumer staples, down 3.9 per cent.

The best-performing stock in the S&P/ASX 200 is Imugene (ASX:IMU), trading 8.8 per cent higher at $0.18. It is followed by shares in Aristocrat Leisure (ASX:ALL) and PolyNovo (ASX:PNV).

The worst-performing stock in the S&P/ASX 200 is Novonix (ASX:NVX), trading 7.6 per cent lower at $3.63. It is followed by shares in Pendal Group (ASX:PDL) and Life360 (ASX:360).

Commodities and the dollar

Gold is trading at US$1,816.04 an ounce.
Iron ore is 2.7 per cent lower at US$126.60 a ton.
Iron ore futures are pointing to a fall of 1.1 per cent.
One Australian dollar is buying 69.72 US cents.
 
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics