ASX trades lower, tech stocks plunge in morning trade
The ASX is trading lower, but off its lows as tech stocks plunge in morning trade.
At noon, the S&P/ASX 200 was down 0.12% or 8.10 points at 7021.70.
SPI futures point to a 12 point drop.
Best and Worst Performers
The best performing sector was utilities, up 0.52%. The worst performing sector was information technology, down 3.46%.
The best performing stock in the S&P/ASX 200 is Imugene (ASX:IMU), trading up 12.96% at $0.30. It is followed by shares of Coronado Global Res (ASX: CRN) and GrainCorp (ASX: CNG).
The worst performing stock in the S&P/ASX 200 is St Barbara (ASX: SBM), trading down 10.33% at $1.08. It is followed by shares of The A2 Milk Company (ASX: A2M) and computer sharing (ASX:UC).
Asia-Pacific stocks fell in early trading on Wednesday as investors await inflation data from China and the United States. The Nikkei 225 in Japan fell 0.63%, while the Topix index fell 0.46%. In South Korea, the Kospi fell 0.54% and the Kosdaq 0.75%. MSCI’s broadest index of Asia-Pacific stocks outside Japan lost 0.22%.
China is expected to release inflation data on Wednesday. The producer price index for July is expected to rise 4.8% from a year ago, according to a Reuters poll. In June, the PPI increased by 6.1%. Consumer prices are expected to increase by 2.9% compared to the same period in 2021.
In company news, Toyota Motor said it would suspend some production operations due to positive Covid cases at worksites. Cathay Pacific and Honda Motor are among the companies that announced their results on Wednesday.
The Australian yield curve continues to flatten with some segments now inverted. The spread between 3- and 10-year yields narrowed to just 23 from around 40 basis points a week ago. Markets remain concerned about a policy mistake with the RBA that is expected to push the cash rate into restrictive territory above 3.00% at a time when deteriorating consumer sentiment is clouding the consumer outlook.
CPI inflation in China is expected to have increased towards the government’s 3.0% target, although the decline in commodity prices should dampen PPI inflation. Some thought the government would tolerate CPI inflation above 3.0% as it seeks to support the economy. However, scope for monetary policy easing is seen as limited, with analysts seeing a low likelihood of further RRR and/or interest rate cuts.
FT discussed speculation that Masayoshi Son might take SoftBank Group (9984.JP) private following its record quarterly loss, a commitment to deep cost cuts and an hour of public self-criticism during his presentation. Additionally, new signs that SoftBank is set to sell key operations such as Fortress and focus more exclusively on its two Vision funds have raised questions among analysts and investors about whether it should still be quoted.
Reuters reported that President Biden signed the CHIPS and Science Act to provide $52.7 billion in subsidies for semiconductor production and research in the United States and to bolster efforts to make the United States States more competitive with China’s science and technology efforts. Biden touted the investments chip companies are making, though it remains unclear when the Commerce Department will write rules for reviewing grants and how long it will take to underwrite projects.
U.S. stocks ended lower in fairly calm trading on Tuesday as investors navigated a series of disappointing corporate reports ahead of a key inflation reading.
Investors are awaiting the latest July consumer price index reading, due tomorrow. The report is expected to show a slight slowdown in inflation, thanks in part to lower oil prices, which could inform the market about the Federal Reserve’s next steps. The market expects the CPI to rise 0.2% on a monthly basis, or 8.7% year-over-year.
Overnight, the S&P 500 fell 0.42% to 4,122.47, while the Nasdaq Composite fell 1.19% to 12,493.93. The Dow Jones Industrial Average fell 58.13 points, or 0.18%, to close at 32,774.41.
The declines came after chipmaker Micron warned that revenue could be lower than its earlier forecast due to “macroeconomic factors and supply chain constraints”. The stock fell more than 3%.
Overall, it’s been a tough week for chipmakers. Nvidia’s weaker-than-expected revenue forecast weighed on the group on Monday, and those stocks extended their losses on Tuesday.
The S&P 500 has climbed for three straight weeks, but the earnings season has been marred by demand warnings from big business executives.
Across all sectors, energy rose while consumer discretionary fell. The worst performing industries were semiconductors, home builders, games and travel-related businesses. Energy, insurance, banking, managed care, steel, food held up better.
Shares of Coinbase fell in extended trading on Tuesday after the crypto exchange reported a loss of more than $1 billion in the second quarter and missed analysts’ estimates for revenue.
Ford Motor said on Tuesday it was raising starting prices for its F-150 Lightning electric pickup due to “significant increases in material costs and other factors.” Raw material costs for electric vehicle batteries have more than doubled during the coronavirus pandemic, according to a recent report by consultancy and research firm AlixPartners
iSelect (ASX: ISU) announced today that it has entered into an agreement to implement the program with Innovation Holdings Australia, which currently owns 26.0% of iSelect. Under the proposal, Innovation Holdings will acquire all of the shares of iSelect that it does not currently own. The program is subject to certain conditions, but if implemented, iSelect shareholders will receive cash consideration of $0.30 per iSelect share. ISU shares are currently trading up 75% at 28c.
Meeka Metals (ASX:MEK) announced a significant new gold discovery. The new results show that large zones of high-grade gold have been intersected at the north end of the company’s St Anne mine. Meeka Managing Director Tim Davidson said, “Pleasantly, these results also demonstrate the significant high-grade potential as we continue to develop the footprint of this large gold system.” Meeka Metals will present the ShareCafe Hidden Gems webinar this Friday noon. Mek shares are currently trading up 32% at 6.6c.
Mayne Pharma Group (ASX: MYX) today announced that it has entered into an agreement with Catalent (NYSE: CTLT), the global leader enabling biopharmaceutical, cellular, genetics and consumer health partners to optimize the development, launch and providing better patient care through multiple modalities, to sell Metrics Contract Services for a total cash consideration of US$475 million. Mayne Pharma will receive net proceeds of approximately US$445 million after transaction costs, restructuring costs and customary closing adjustments. Mayne Pharma Chairman, Mr. Frank Condella, said, “I am pleased to announce the sale of Metrics, which is a key driver of the company’s transformation program to reposition Mayne Pharma for growth. This transaction unlocks significant value for Mayne Pharma shareholders and creates a leaner, more focused company with financial flexibility to support its strategic priorities. Shares of MYX are currently trading up 7.35% at 36.5c.
Commodities and the dollar
Gold is trading at US$1792.09 per ounce.
Iron ore futures point to a 1.4% decline.
One Australian dollar buys 69.61 US cents.