ASX falls on job numbers and as recession fears return to Wall Street

Australian stocks fell further after the latest employment figures showed job creation slowed in September, although the country’s unemployment rate remained stable at around a 50-year low.

The end of a two-day rally on Wall Street set the tone for the day’s trading.

Almost every industry sector in the benchmark ASX 200 fell except for energy stocks, which were boosted by strong quarterly production reports from major players.

Among the losers were industrial, real estate and technology companies, as well as mining and healthcare companies.

Westpac, National Australia Bank and Commonwealth Bank ended higher, while ANZ was flat.

The major indexes came off their lows, with the All Ordinaries ending down 1.2%, at 6,919, and the ASX 200 index lost 1%, at 6,731.

The Australian dollar weakened further after the release of employment figures.

The local currency fell below 62.30 US cents during the day as investors bet that the Reserve Bank would continue to slow the pace of interest rate increases.

As of 4:30 p.m. AEDT, it had recovered ground to around 62.61 US cents.

ABC currency strategist Joseph Capurso said he expects the Australian dollar to fall below US60 on the back of a global recession, a strengthening greenback and a slowing economy. Chinese economy.

Battery materials maker Novonix jumped a quarter after announcing it had been selected to enter negotiations to receive $150 million ($239 million) in grants from the US Department of Energy to develop national production.

The worst performers in the index were copper miner Sandfire Resources (-13.2%) and data center operator Megaport (-11.8%).

Gold miner Evolution Mining (-8%) fell after saying gold production fell from July to September.

Buy now, pay later Zip (+1.6%) said revenue in the September quarter rose nearly a fifth to $163 million as trading volumes hit 2.2 billions of dollars.

The number of active customers increased by 17% compared to a year ago to reach 7.4 million.

Benefits of the energy crisis

The global energy crisis caused by the war in Ukraine has benefited Australia’s major oil and gas companies.

Santos (+1.9%) said revenue in the September quarter nearly doubled to a record high of $2.2 billion ($3.5 billion), due to higher sales and of soaring liquefied natural gas prices.

The company said its average realized price for LNG rose by nearly two-thirds from July to September.

Production was boosted by last year’s takeover of Papua New Guinea-based Oil Search.

Meanwhile, Woodside Energy (+6.2%) recorded record quarterly production of 51.2 million barrels of oil equivalent.

The record sales helped it post record revenue of $5.9 billion ($9.4 billion) in the quarter.

It also raised its production forecast for the year.

Woodside doubled its production after merging with BHP’s oil business.

Wall Street in the red

U.S. stocks fell after a two-day rally as the cost of government borrowing soared, and more warnings came from corporate giants about economic storm clouds on the horizon.

All three major equity indices ended in the red and interest rates on US government bonds resumed their rise, with the benchmark 10-year Treasury yield hitting a 14-year high.

Big business earnings reports were mixed.

Abbott Laboratories reported weaker growth in international medical device sales due to greenback strength and supply issues in China.

There was also a drop in sales of COVID-19 test kits as testing declined due to a slowing pace of infections.

Consumer products maker Procter & Gamble and insurer Travelers Companies posted quarterly profits that beat expectations.

Electric vehicle company Tesla reported record third-quarter revenue of $21.45 billion ($34.2 billion) and deliveries reached 343,000 in the September quarter, also a record thanks to a ramp-up in China.

Third-quarter profit doubled from a year ago to $3.3 billion ($5.3 billion) due to higher vehicle sales.

Rising raw material prices and spending on new factories and battery production have squeezed Tesla’s profit margins.

Shares of Netflix jumped 13% after adding 2.4 million subscribers worldwide in the third quarter.

The Dow Jones Industrial Average fell 0.3% to 30,424, the S&P 500 fell 0.7% to 3,695 and the Nasdaq Composite lost 0.9% to 10,681.

David Keator of wealth management firm Keator Group said the sharp hike in interest rates by the US Federal Reserve to curb inflation was dampening investor appetite.

“We have seen a bear market bounce, but the market is still uncertain as [to] when the Fed will recognize that what it has done, to date, is starting to take effect,” he said.

“The Fed takes its inflation-fighting mandate seriously, but there have been rumors of excessive tightening.”

In terms of economic news, housing starts in the United States fell 8.1% in September, compared to a rebound of almost 14% in August.

The Federal Reserve said the U.S. economy continued to expand, though stable in some regions and down in a few areas, and price pressures remained high.

“The outlook has become more pessimistic amid growing concerns about weakening demand,” the Fed said in its Beige Book.

In the UK, inflation returned to its highest level in 40 years, with consumer prices rising at an annual rate of 10.1%, equaling the highest in 40 years reached in July.

This increase was fueled by rising food, energy and transportation prices.

Political turmoil continued, with Prime Minister Liz Truss denying calls for her resignation and the loss of another cabinet minister with the resignation of Home Secretary Suella Braverman after breaking cabinet code.

This news weighed on European stocks.

The FTSE 100 in London fell 0.2% to 6,925, the DAX in Germany also fell 0.2% to 12,741 and the CAC 40 in Paris fell 0.4% to 6,041.

Goods

Oil prices rose after a drop in crude oil inventories in the United States.

This is after it fell to around the lowest in a fortnight, amid US President Joe Biden’s plans to sell 15 million barrels of oil from the country’s emergency reserves.

Mr Biden wants to cut gasoline prices ahead of the midterm congressional elections next month.

He said he would replenish reserves when oil prices fall to around $70 a barrel.

The move comes after major OPEC+ oil exporters agreed to cut production to boost prices.

Brent crude oil rose 2.3% to US$92.15 a barrel.

Spot gold fell 1.4% to $1,628.99 an ounce on the higher greenback and UK inflation news.

ABC/Reuters

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