The ASX took a tumble today.
The S&P/ASX 200 index fell 69.40 points or 1.02% to 6,730.70. Over the last five days, the index has gained 1.33%, but is down 9.59% for the last year to date.
Bottom-performing stocks in this index are Megaport Ltd (ASX:MP1) and Sandfire Resources Ltd, down 11.65% and 12.17% respectively.
The dip came as no surprise after the S&P 500 retreated 0.67% overnight. The Nasdaq was down 0.85% and the Dow lost 0.33%.
Today’s losses on the ASX followed the release of September's employment data (more on that shortly).
Looking at the sectors, only Energy hit the green rising 3.13%. Information Technology took the biggest hit, losing 3.76% and Materials was the next biggest loser down 2.43%.
The rise in Energy helped Woodside Energy Group Ltd (ASX:WDS, LSE:WDS, OTC:WOPEF), which has been in the news for sponsorship reasons.
The company was also helped by the lift in its annual production guidance after delivering a 70% jump in third-quarter revenue on booming gas prices.
Woodside was 6.02% higher to $34.51.
Note: Fremantle Dockers President Dale Alcock responded to Woodside sponsorship critics saying the club is “respectful of the point of view of others” but that it will be maintaining the partnership with Woodside.
Santos Ltd (ASX:STO) was also higher on a third-quarter production boost and record sales following its $21 billion takeover of rival operator Oil Search.
In the news today
Job rates tumble
The latest employment data hit the market hard.
Just 900 people entered the workforce compared to an expectation of 25,000 in September and while the unemployment rate is unchanged at 3.5%, the lack of newly employed Australians is actually normalising.
CreditorWatch chief economist Anneke Thompson said of the numbers: “The September unemployment rate was steady on a seasonally adjusted basis, at 3.5%. There was very little movement in both employed people and the number of unemployed people rose slightly by 8,800, or 1.8%.
“The labour force data reflects patterns we see in Job Vacancy data, with the latest quarterly data showing a slight decrease in the number of jobs available over the August quarter.
"Given this is a leading indicator, and collected quarterly, we expect that employment in Australia is now reverting back to more normal growth trends. Job vacancies are likely to also continue to ease, especially as seasonal job requirements in hospitality and retail slow after Christmas and the summer holiday period.”
Thompson said the numbers should be of comfort for the Reserve Bank of Australia ahead of its next rates meeting in a couple of weeks.
“Coupled with CreditorWatch’s B2B Trade receivables data, which shows trade amongst small businesses is slowly normalising, it appears we are now moving away from the extreme peaks and troughs of the lockdown and post-lockdown era.
"This should give the RBA a degree of comfort, as consumers and borrowers should also start to respond to interest rate rises more normally. That is, reduce spending and alter their buying patterns.”
In seasonally adjusted terms, in September 2022:
- Unemployment rate remained at 3.5%.
- Participation rate remained at 66.6%.
- Employment increased to 13,590,800.
- Employment to population ratio decreased to 64.2%.
- Underemployment rate remained at 6.0%.
- Monthly hours worked decreased to 1,853 million.
- Unemployment rate remained at 3.5%.
- Participation rate increased to 66.7%.
- Employment increased to 13,608,200.
- Employment to population ratio remained at 64.3%.
- Underemployment rate remained at 6.0%.
- Monthly hours worked increased 0.1% to 1,859 million.
Tasmania added 3,700 jobs over September, while the Northern Territory had an extra 400 people in work.
Bjorn Jarvis, head of labour statistics at the ABS, said: "With employment increasing slightly, by around 1,000 people, and the number of unemployed increasing by 9,000, the unemployment rate rose by less than 0.1 percentage point but remained at 3.5% in rounded terms."
“It is important to remember that the 1,000 employed people is a net figure – the difference between two large numbers. While employment growth has slowed in recent months, there are still close to half a million people entering employment each month, and around the same number leaving employment each month,” Jarvis said.
Tesla (NASDAQ:TSLA) earnings
Tesla Inc (NASDAQ:TSLA) has released its quarterly earnings.
Stake markets analyst Eliot Hastie gives his take on the numbers and how this may affect ASX lithium stocks.
“Tesla shares fell just over 5% after the bell as the company revealed a drop in revenue over the quarter, despite a record 343,000 car deliveries. But this was still short of analysts’ expectations, with supply chain issues reported as the main culprit.
"That said, some analysts believe that softening demand is the primary concern, with sales in China — Tesla’s biggest market — having slowed due to rising competition and a poor macroeconomic landscape.
“Tesla still makes up just under a fifth of all global battery-only electric vehicles sales, so it’s a significant sentiment driver for Australian lithium stocks. The brand’s earnings could be seen as a negative sign for lithium demand in the short term by some, but the need for this commodity is still predicted to increase exponentially over the long term.
“Many investors will be watching local stocks including Core Lithium Ltd (ASX:CXO) which is set to agree on the terms of an offtake agreement with Tesla on October 26. While it’s not yet clear whether the two parties will have reached terms, the current agreement would see Core Lithium provide Tesla with lithium spodumene concentrate for four years, with production starting in 2023.
“Tesla has also inked a five-year supply agreement with Australia’s Liontown Resources (ASX:LTR) Ltd, which will provide the electric vehicle giant with more than 100,000 tonnes of lithium spodumene concentrate a year from 2024. Syrah Resources Ltd (ASX:SYR) confirmed it signed an offtake agreement with Tesla last year.
“There was a 500% increase in Tesla buys following its early October delivery announcement, and we also saw a steady increase in purchases leading up to the most recent earnings call. Activity volume is significantly higher than last quarter, showing that many investors could be migrating back towards tech stocks that they believe have strong long-term prospects.”
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