The ASX is set to fall today after a heavy sell-off on Wall St on Friday. ASX 200 futures are down 1.3% to 7,883 points.
Today’s likely fall will follow the ASX200’s -0.97% finish at 8,013 last week, following hawkish rhetoric from the RBA about interest rates.
Last week, the worst-performing sectors were Energy (-9.07%), Materials (-5.82%), Utilities (-3.28%) and Consumer Staples (-1.70%). The Financials (+2.59%), Real Estate (1.23%) and IT sectors (+1.02%) were the only sectors to finish higher.
At a stock level, Mineral Resources Ltd (ASX:MIN) (-23.66%), Liontown Ltd (-20.67%), Pilbara Minerals Ltd (ASX:PLS) (-18.66%) and Bannerman Energy Ltd (ASX:BMN) (-15.43%) were among last week's biggest losers.
The biggest winners last week were Cettire Ltd (+40%), Articore Ltd (+10.96%), Nanosonics Ltd (+10.22%) and Aussie Broadband Ltd (ASX:ABB (ST:ABB)) (+9.79%).
“This week is a quiet one data-wise in Australia, with just Westpac Consumer Confidence and NAB Business Confidence data set to be released,” writes IG Markets analyst Tony Sycamore. “Last Month (August), the Westpac-Melbourne Institute Consumer Sentiment index jumped by 2.8% to a six-month high of 85.0.
“The rebound to the highest sentiment reading since February came as the effects of tax cuts and fiscal measures became more visible and worries over RBA rate hikes eased.
"The preliminary expectation for this month (September) is for a fall back to 83. The interest rate market shows an 85% chance of a 25bp RBA rate cut in December, with a cumulative 57bp of RBA rate cuts priced by April 2025.”
What happened in the US
US equity markets experienced a sharp decline on Friday night due to concerns about a cooling labour market and a sell-off in the technology sector. Over the week, the Nasdaq dropped by 5.89%, the S&P 500 lost 4.25% and the Dow Jones declined by 2.93%.
The release of the highly anticipated jobs report presented mixed results. Non-farm payrolls increased by 142,000, falling short of expectations of 165,000, while the previous two months saw significant downward revisions, including July’s figure, revised from 114,000 to 89,000. The unemployment rate slightly decreased to 4.2% from 4.3%.
Although these indicators suggest a cooling labour market, the report was not weak enough to prompt an immediate 50 basis point rate cut by the Federal Reserve.
In the technology sector, major companies faced notable losses. Tesla (NASDAQ:TSLA) fell by 8.45%, Alphabet (NASDAQ:GOOGL) dropped 4% and Amazon (NASDAQ:AMZN) declined by 3.65%. Chipmakers also suffered, with Broadcom (NASDAQ:AVGO) plunging 10.3%, ARM losing 4.71% and Nvidia decreasing by 4.1%.
In the tech space, Tesla, Alphabet and Amazon saw substantial losses, dropping 8.45%, 4% and 3.65%, respectively. The chipmakers were hit hard, too, with Broadcom plunging 10.3%, ARM 4.71% and Nvidia down 4.1%.
“With the Fed in its blackout period ahead of the September 18 FOMC meeting, the focus shifts to this week's inflation data. Last month (July) the annual headline inflation rate cool to 2.9%, the lowest since March 2021,” Sycamore said.
“The core inflation rate, which excludes the volatile food and energy sectors, matched expectations falling to a more than three-year low of 3.2%.
"Looking to August, initial expectations are for headline inflation to ease further to 2.6% YoY, with core inflation remaining steady at 3.2% YoY.
"The rates market is pricing 35bp of Fed rate cuts for September, with a total of 109bp of cuts priced by year-end.”
European sharemarkets
Declined for the fifth consecutive session on Friday as investors assessed mixed US employment data.
The technology, basic materials, and energy sectors were the hardest hit, each dropping more than 2%.
- The pan-European FTSEurofirst 300 index fell 1.1%, marking a 3.7% loss for the week.
- In London, the UK FTSE 100 index slipped 0.7%, bringing its weekly decline to 2.3%, the steepest since mid-January.
Currencies and commodities: mixed trends
Currencies
Experienced mixed movements against the US dollar during European and US trading sessions.
- The Euro declined from US$1.1148 to US$1.1066, settling near US$1.1085 by the US close.
- The Australian dollar dropped from US$0.6766 to US$0.6658, closing at approximately US$0.6670.
- The Japanese yen strengthened, rising from 143.88 to 141.82 yen per US dollar, before ending near JPY142.25.
Commodities
Global oil prices settled lower, dropping by 2% due to weaker-than-expected US employment data in August.
- Brent crude fell by US$1.63 (2.2%) to US$71.06 per barrel, reaching its lowest level since December 2021.
- The US Nymex crude price declined by US$1.48 (2.1%) to US$67.67 per barrel.
- Brent and Nymex posted significant weekly losses of 9.8% and 8%, respectively.
Base metal prices also retreated.
- Copper futures slipped 1.5% and aluminium futures were down 0.5%. For the week, both contracts saw losses exceeding 3%.
- Gold futures dropped by US$18.50 (0.7%) to US$2,524.60 per ounce, with spot gold trading near US$2,497. Gold dipped 0.1% for the week, following mixed US jobs data that raised uncertainty over potential US interest rate cuts.
- Iron ore futures fell by US31 cents (0.3%) to US$91.61 per tonne, driven by weak Chinese economic data and reduced demand in the steel market, marking an 8.9% weekly loss—the sharpest in nearly two years.
What about small caps?
The S&P/ASX Small Ordinaries (XSO) finished Friday 0.29% to the red. For the week, the index lost 3.20%.
It has been a quiet start to the week for newsflow, however, there have been some strong announcements that you can read about throughout the day.
- Sarytogan Graphite Ltd (ASX:SGA) will start a 20-tonne trial mining exercise this week to collect ore for vendor test work and customer sample generation.
- Tolu Minerals Ltd (ASX:TOK) announced preliminary results from Phase 1 of an Airborne Mobile Magneto Telluric (MT) survey covering 723 square kilometres including ML 104 and surrounding exploration licences. The MT survey will next be completed over Tolu’s porphyry/skarn exploration licence application at Ipi River, ELA 2780.
- Sipa Resources Ltd (ASX:SRI) has provided an update on its Barbwire Terrace Project, which is a 50:50 joint venture with Buru Energy Ltd (ASX:BRU, OTC:BRNGF). Initial review of the ground gravity survey has highlighted a significant gravity anomaly as well as structural complexity in a priority area at the 50% owned Barbwire Terrace lead-zinc,silver project. Drilling is planned for 2025.
- Cyprium Metals Ltd (ASX:CYM, OTC:CYPMF) has provided an update relating to its previously released scoping study for the new surface mine at the Nifty copper complex. Cyprium’s technical partner MEC Mining (MEC) completed an updated geotechnical study to advance Cyprium’s knowledge of the expected mining conditions to a Pre-Feasibility (PFS) level of confidence.
- MetalsGrove Mining Ltd (ASX:MGA) has won the rights to ELA 77/3152, a tenement prospective for copper and gold. The tenement, which is approximately 135 kilometres south of the Southern Cross township and gold province and approximately 385 kilometres east of Perth, comprises an area of approximately 66.7 square kilometres.