- 01ASX 200 edged up 0.2% to 8,908.1 despite Wall Street’s tech rout.
- 02Local tech stocks fell 1.3%.
- 03Coles dropped 7.7% after a weak sales update.
Australia’s share market recorded slight gains by the close on Friday despite a massive sell-off in Wall Street technology shares.
Initially, Australian shares resisted the pull of major technology stocks and the ASX 200 was up as much as 1% to a seven-week high but by the close that had softened to a 16.3-point rise, or 0.2%, to 8908.1 points as sentiment weakened.
It was still a solid performance given the turmoil on Wall Street, with eight of the 11 sectors closing up, led higher by a rebound in consumer discretionary stocks.
Coles shares (ASX: COL) helped to push a downturn in consumer staples, plunging as much as 12.5% after a weak sales update before recovering to record a 7.7% fall to $21.66 a share as the broad technology sell-off hit sentiment.
Wall Street savages Google
The Wall Street action was fast and furious with more than $711 billion wiped from the market value of Google parent Alphabet as fears grew that artificial intelligence was reducing profits in its main advertising business.
That marked the biggest one-day loss in market value in the technology giant’s history as the AI trade continued to falter as the Nasdaq fell 1.6%.
Google was not alone with shares in chip-maker Intel down 22% late in the day after its revenue forecast fell short of analysts’ estimates.
The main problems seemed to be weakening demand for personal computer processors and supply issues with lucrative data centre components.
Even Amazon joined the mini tech-wreck after weak fourth-quarter revenue guidance pointed to softening retail demand, as consumers curbed spending amid higher prices and ongoing cost-of-living pressures.
There was one bright light in the Amazon guidance, as its cloud unit recorded very strong growth.
Local tech stocks hit
Asian markets, including South Korea, caught the technology flu, and their downturns continued to weigh on Australia’s smaller technology sector, which closed down 1.3%.
TechnologyOne shares (ASX: TNE) fell 1.4% to $31.73 while Xero shares (ASX: XRO) fell 2.4% to $64.10 while shares in data centre developer Goodman Group (ASX: GMG) fell 1.1% to $27.
Some miners weaker
There wasn’t much comfort to be had in the mining sector after Rio Tinto halted underground operations at its Oyu Tolgoi copper mine after a seismic event triggered a rockfall that injured three workers.
The accident, together with a fall in copper prices, sent Rio Tinto (ASX: RIO) shares down 1.8% to $147.31.
Fellow copper producer BHP (ASX: BHP) had no such problem, with its shares firming slightly by 4c a share to $57.56 while shares in titanium company IperionX (ASX: IPX) fell by another 12.2% to $2.15.
Consumer discretionary stocks rose 2.7% as traders bet the sector had been oversold. Wesfarmers (ASX: WES) rose 3.6% to $76.69 on positive broking reports, while Aristocrat Leisure shares (ASX: ALL) gained 1.8% to $64.39 and JB Hi-Fi shares (ASX: JBH) were up 6.2% to $72.88.
Positive reports bring results
There was some positive price action on the back of announcements with shares in plumbing parts group Reece (ASX: REH) rising 8.4% to $17.09 after it increased September quarter sales revenue by 4.3%.
Civmec shares (ASX: CVL) gained 4.3% to $1.70 after posting record quarterly revenue of $324 million and shares in Reliance Worldwide (ASX: RMC) rose 2.1% to $4.39 after an independent expert found Brookfield’s $4.1 billion takeover bid to be “fair”.
Adding to the positive sentiment among consumer discretionary stocks, Dan Murphy’s owner Endeavour Group shares (ASX: EDV) rose 4.3% to $3.39 after reporting a 2.8% increase in first-quarter sales.
The week ahead
In the coming week, the big news will be the Reserve Bank interest rate decision, with another increase increasingly likely. This would be the fifth rise, taking the cash rate to as high as 4.85%.
That would mark an 18-year high, with a reprieve possible only if employment weakens and redundancies increase in the banking sector.
Inflation is well above the RBA’s target zone and any rise would bring the prospect of official rates rising above the magic 5% rate with just one more rise in the New Year if inflation continues to ramp up.
The commentary on inflation, growth and unemployment will also be closely watched after Tuesday’s decision.
Midterm elections due
The other big market mover could be the results of the US midterm elections as Republican control of the House of Representatives and the Senate comes under threat.
A poor showing by the Republicans could put a significant brake on President Trump’s plans for the final two years of his current term.
Locally, two of the ‘big four’ banks will also report results, with Westpac reporting its full-year results on Monday and NAB reporting results on Thursday.
Macquarie Group will also release its half-year results on Friday. Some dual-listed companies, including Block, Amcor and News Corp, will report quarterly results.
A range of US companies will also report results, including Apple, Berkshire Hathaway, Palantir, Marriott International, Estée Lauder, Fox Corp, Amgen, Pfizer, Electronic Arts, Yum Brands, Qualcomm, McDonald’s, Uber, CVS Health, DoorDash, Expedia, Kraft Heinz, Snap Inc., ConocoPhillips, Airbnb, Microchip Technology, Atlassian, Kimberly-Clark, Mattel, Moderna, Humana and Vistra Corp.
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The ASX small-cap stories that matter, filed before 9am AEST. Curated by the Small Caps desk.