Market wrap: Miners send Australian market lower despite strong US lead

Market wrap: Miners send Australian market lower despite strong US lead

A crunch in the share price of miners and Commonwealth Bank sent the Australian share market lower on Friday after it ignored a strong lead from Wall Street which rose to a record high on the back of slowing inflation.

The ASX 200 fell 73.3 points, or 0.8%, to 9115.2 points which was still a bit of a recovery after at one stage the index was down more than 1%.

The fall meant the market lost ground by 1.7% over the week, dashing hopes of an immediate resumption of an Australian catch-up rally.

Instead, the US market ploughed further into record territory while we languished, with nerves about looming profit reports from BHP and other companies in the coming week.

Results season makes traders nervous.

Our two biggest stocks – Commonwealth Bank and BHP – were both down heavily on concerns about their prospects after a reasonably strong profit release from CBA and one to come this week from BHP. Commonwealth shares (ASX: CBA) were down 1.1% to $167.17 after also falling 2.2% on Thursday, while BHP shares (ASX: BHP) shed 3.3% to $61.35.

Wall Street still hitting records.

The dip in Australia followed overnight gains on Wall Street, with the S&P 500 resetting its record high after a benign US producer price report gave traders more confidence that the Federal Reserve would hold off on raising interest rates.

Nevertheless, traders in Australia remained nervous about the current results season which has so far produced more disappointments than pleasant surprises.

QBE Insurance shares (ASX: QBE) were a good example, dropping 1.6% to $23.09 after posting a largely flat profit for the half-year to June 30.

Baby Bunting shares (ASX: BBN) rose 5.8% to close at $1.28, after at one stage soaring to gain 16% after the company posted a 17.5% increase in annual net profit and flagged an expected profit increase in the current financial year.

Shares in Ainsworth Game Technology (ASX: AGI) rose 4.2% to close at $1.12 after reaching an agreement with Aristocrat’s technology wing to patent some of its products and settling historic claims related to the use of those patents.

Shares in Alcoa (ASX: AAI) fell 3.2% to $49.59 after it signed a 10-year gas deal with Equus Energy at a cost of $1.5 billion.

Shares in Equus (ASX: EQU) fell 6.3% to $1.05.

The week ahead

As mentioned earlier, the profit reporting season in Australia is overwhelming other share market influences and the coming week is expected to be vital for many companies.

The biggest one to watch for is BHP on Tuesday with fellow iron ore miner Fortescue reporting on Thursday.

Other big names to watch out for include Aurizon, BlueScope Steel, GPT, JB Hi-Fi , Lendlease, National Australia Bank, New Hope Corporation, Challenger, Cochlear, CSL and Hub24 to name just a few.

On the official release side, the biggest one to watch for is the local labour force figures which will give a picture of how the employment market is holding up.