The Australian sharemarket extended losses at the opening bell on Wednesday following a mixed performance on Wall Street.
The benchmark S&P/ASX 200 Index fell 0.4 per cent, or by 29.6 points to 7725.8 at the start of trade. Local shares suffered the biggest daily drop in six weeks on Tuesday, slumping 1.3 per cent as traders braced for the US Federal Reserve to push back on immediate rate cuts at its policy meeting this week.
The materials sector was the worst performer, tracking yesterday’s sharp drop in the iron ore price on concerns over demand in top consumer China. Index heavyweight BHP fell 1.1 per cent, Rio Tinto lost 1.2 per cent and Fortescue Metal declined 1.3 per cent.
Overnight in New York, banking stocks dragged the Dow Jones lower. Meanwhile, the Nasdaq and S&P 500 rose, bolstered by a 7.3 per cent surge in Apple on optimism about plans to boost its devices with AI capabilities.
Apple finished the session at $US207.15 (from a peak of $US207.16) with a market cap of $US3.18 trillion; Microsoft is at $US3.22 trillion. Nvidia is at $US2.97 trillion. A well-received US government sale of $US39 billion of bonds bolstered optimism that policymakers will pivot to rate cuts later this calendar year.
Investors were keenly awaiting the May US CPI report scheduled for 10.30pm on Wednesday and the Fed’s policy decision at 4am on Thursday.
Tom Lee, head equity strategist at Fundstrat Global, said he’s expecting a renewed rally.
“When markets lack visibility, negative views and concerns prevail and that is why equities have been drifting lower since Friday. But we believe Wednesday (Thursday AEST) will mark a positive turning point for stocks.”
Stocks on the move
Macquarie has upgraded Woodside to an “outperform” rating, with analysts arguing that the market is excessively pricing commodity, project and climate risks into the company’s valuation. Shares in Woodside rallied 1.4 per cent.
Automotive parts retailer Bapcor was once again among the index’s top performers, up 1.6 per cent after surging 14 per cent on Tuesday when it received an unsolicited bid from US-based Bain Capital to buy its shares at $5.40 apiece.
In corporate news, the board of Super Retail has appointed Fonterra’s global markets chief executive officer, Judith Swales, as chairwoman of the company. Super Retail which owns Supercheap Auto, Rebel, BCF and Macpac, flagged in 2022 that chairwoman Sally Pitkin would step down from her position at the 2024 annual general meeting.