ASX 200 falls to near 7,750, despite higher Wall Street overnight
- ASX 200 Index snaps its winning streak, following losses in energy and consumer stocks.
- The shutdown of South32's GEMCO led to Jupiter Mines share rallying almost 20% in the last two sessions.
- Apple's stock declined by 4.1% following news of a lawsuit from the US Department of Justice for alleged monopolistic practices.
The ASX 200 Index edges lower to near 7,750, down by approximately 0.16% on Friday, snapping its winning streak that began on March 15. The index's downturn was primarily attributed to losses in energy and consumer stocks. The A-VIX has experienced a sharp decline, dropping by 0.92% to 12.92. Additionally, the All Ordinaries Index is down by 0.32%, currently standing at 8,019.
In the ASX 200 Index, Genesis Minerals experienced a significant decline, plunging to 1.792, marking a decrease of 7.45%. Telix Pharmaceuticals dropped to 12.620, down by 4.97%. On the positive side, Fisher & Paykel Healthcare showed strong performance, trading near 23.560, with an increase of 5.0%. Additionally, Light & Wonder rose to 165.02, up by 2.30%.
However, Wall Street experienced upward momentum overnight, with all three major benchmarks setting record highs. This surge followed positive sentiment stemming from the US Federal Reserve (Fed) reaffirming its outlook for three interest rate cuts this year in its latest policy decision.
The surge was somewhat tempered by a 4.1% decline in Apple stock, as the company faces a lawsuit from the US Department of Justice for alleged monopolistic practices. The Justice Department alleges that Apple makes it challenging for competitors to integrate with the iPhone's hardware and software features.
South32's Groote Eylandt Mining Company (GEMCO) has halted operations due to Cyclone Megan, resulting in the disruption of approximately 10% of the global manganese supply. For the fiscal year 2024, prior guidance indicated production of 1.7 million tonnes from GEMCO. The supply disruption could potentially lead to a tighter manganese market in the short term.
The shutdown of GEMCO has had a positive impact on Jupiter Mines, the largest ASX-listed manganese producer, with its share rallying almost 20% in the last two sessions. This surge has lifted the company's 12-month performance to break even. Jupiter Mines aims to increase production by 300% over the next five years.
Altech Batteries has disclosed favorable outcomes from a definitive feasibility study (DFS) for its Cerenergy sodium chloride solid-state battery project in Germany. The project, slated for construction on Altech's land at the Schwarze Pumpe Industrial Park in Saxony, is anticipated to establish a new benchmark in sustainable energy solutions. It is projected to have an annual capacity of 120 1MWh grid packs.
Australian Stock Market FAQs
Stock markets in Australia are managed by the Australian Securities Exchange (ASX), headquartered in Sydney. The main indices are the S&P/ASX 200 and the S&P/ASX 300, which track the performance of the 200 and 300 largest stocks by market capitalization listed on the exchange, respectively. The S&P/ASX 200 was launched in April 2000, and it is rebalanced every quarter.
Almost half of the index belongs to the financial sector, with major banks like the Commonwealth Bank of Australia, Westpac or National Australia Bank. The so-called materials sector is also relevant – comprising almost 20% of the weighting in the index – with mining giants such as BHP Group or Rio Tinto. Other important sectors are biotechnology, real estate, consumer staples and industrials.
Many different factors drive the ASX 200, but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual earnings reports the main factor behind its performance. Commodity prices can also affect the index given its significant share of mining companies. Macroeconomic data such as Gross Domestic Product (GDP) growth, inflation, or unemployment data from Australia is also important as they are indicators of the health of the country’s economy and thus the profitability of its largest companies. Global economic conditions may also play a role, particularly from China, as the Asian country is Australia’s largest trading partner.
The level of interest rates in Australia, set by the Reserve Bank of Australia (RBA), also influences the ASX 200 and ASX 300 indexes as it affects the cost of credit, on which many firms are heavily reliant. Generally, when the RBA cuts interest rates (or signals it is going to do it), it is positive for the Australian stock market as it means a lower cost of credit for companies and higher economic growth ahead, likely boosting sales. On the contrary, if the RBA signals that it will increase interest rates, this tends to weigh on the index. As always, there is a caveat: banks. Financial institutions tend to benefit from higher interest rates because they earn more from lending to other businesses, thus boosting their overall income.
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