Miners drill lower as Beijing blues crush ASX, closing 2.1% lower

Mining and energy stocks felt the pain as investors climbed the wall of worries as concerns mount about a slowdown in global growth on rising Covid-19 cases in China, not just in Shanghai, but now in Beijing, sending the commodities complex lower amid an imminent rate hiking cycle set to sail in an effort to fight inflation.

The index sank as much as 2.4 per cent as catch up trading resumed after a three-day break with all sectors badly bruised with 166 of 200 shares closing in negative territory.

At the closing bell, the S&P/ASX 200 was 2.1 per cent or 155 points lower at 7,318, its biggest fall since February 24 last year when the market notched a 3 per cent decline.

Steel making titans BHP (ASX:BHP) Rio Tinto (ASX:RIO) and Fortescue Metals (ASX:FMG) suffered massive losses amid the iron ore price tumbling. BHP (ASX:BHP) shares dived 5.8 per cent to $45.66, Rio Tinto (ASX:RIO) lost 4.3 per cent to $108.76 and Fortescue Metals (ASX:FMG) closed 6.9 per cent lower at $19.76. Heavy declines were seen in Mineral Resources (ASX:MIN) plunged 9.9 per cent to $54.67 and Champion Iron (ASX:CIA) fell 9.2 per cent to $6.79, reflecting the pressure facing the materials sector.

Energy shares were the second hardest-hit sector after materials, plunging 4 per cent. Woodside Petroleum (ASX:WPL) closed 4.6 per cent lower to $30.60 after posting a 17 per cent quarterly decline in sales revenue, partly blaming “lower trading activity”.

A 38.6 per cent fall to $1.67 for payments firm EML Payments (ASX:EML) didn’t help either, with the fintech issuing a profit downgrade on slowing European growth, notching its worst performance since May 19.

The major banks all fell with Westpac (ASX:WBC) leading the fall with a 1.3 per cent decline to $23.90.

However, analysts believe that what comes after a tumble is a hard and fast rebound with a technical bounce in the near term set for the sector. Following the production updates last week with misses from some industry leaders, labour shortages continue to weigh, while lockdowns in China haven’t helped amid the concerns on the war in Ukraine increasing scarcity fears.

Though, China’s pledge to boost monetary policy support for the nation relieved some of the concerns about the global recovery outlook. The yuan pushed higher after the PBOC cut the amount of money banks must set aside in reserve for foreign-currency holdings, effectively boosting the domestic supply of dollars.

As we approach the end of April, we head into the season of “sell in May and go away” with traders hopeful for a much nicer month. April is proving to be ugly across several asset classes, exacerbated by the moves in China amid a medley of hawkish Fed speak. Bonds and currencies are selling off and the equity market is capitulating with currency couples like the Japanese yen growing wider against the greenback. All this ahead of big tech earnings tonight on Wall St from Microsoft and Alphabet as investors hope that results could ease the pain.

Stocks on watch

Ansell (ASX:ANN) is set to shut its factory in Russia in June, a year after it opened the plant in the wake of the Russian invasion of Ukraine as it takes the final steps towards ending its business in Russia, where it had a market share in higher-end medical gloves of up to 80 per cent, according to the AFR. Shares closed 0.9 cent to $26.38.

The bidding war continues with AMP (ASX:AMP) amid Mirvac Group now in advanced talks with investors to take control of AMP Capital’s flagship office fund, in a deal slated to occur in parallel with Dexus’ wider move on AMP’s asset management arm, according to the AFR. Shares closed 1.9 per cent lower to $1.03.

If you’re into NFT’s, non fungible tokens which are smart contracts tied to digital goods by way of a QR code that’s all recorded on a blockchain, Treasury Wine (ASX:TWE) shares closed 0.5 per cent lower to $11.08 amid reports from Bloomberg that luxury wine makers are betting on NFTs.

Online church giving provider Pushpay Holdings (ASX:PPH) has received unsolicited, non-binding and conditional takeover offers. The church donor management technology company, which had a market value of $1.1 billion before, has been growing its revenue and net profits solidly over the past four years. Shares soared 23 per cent higher to $1.18.

Broker moves

Join me here as we go through a deep dive on the coal miners on the ASX and what analysts think of Whitehaven Coal (ASX:WHC) and Terracom (ASX:TER). 

Futures

The Dow Jones futures are pointing to a rise of 27 points.
The S&P 500 futures are pointing to a rise of 4 points.
The Nasdaq futures are pointing to a rise of 14 points.
The SPI futures are pointing to a fall of 31 points when the market next opens.

Best and worst performers

All sectors closed in the red. The sector with the fewest losses was Industrials, down 0.7 per cent. The worst-performing sector was Materials, down 5.1 per cent.

The best-performing stock in the S&P/ASX 200 was Virgin Money UK (ASX:VUK), closing 2.3 per cent higher at $3.09. It was followed by shares in Block (ASX:SQ2) and Nufarm (ASX:NUF).

The worst-performing stock in the S&P/ASX 200 was EML Payments (ASX:EML), closing 38.6 per cent lower at $1.67. It was followed by shares in Mineral Resources (ASX:MIN) and Sims (ASX:SGM).

Asian markets

Japan’s Nikkei has gained 0.7 per cent.
Hong Kong’s Hang Seng has gained 0.9 per cent.
China’s Shanghai Composite has lost 0.6 per cent.

Commodities and the dollar

Gold is trading at US$1905.02 an ounce.
Iron ore is 9.8 per cent lower at US$135.75 a ton.
Iron ore futures are pointing to a fall of 2.0 per cent.
Light crude is trading $0.91 higher at US$99.45 a barrel.
One Australian dollar is buying 72.09 US cents.

Sources: Bloomberg, IRESS, FactSet