ASX Mixed as Mining Giants Face Headwinds, Tech Bounces Back
Australian shares presented a mixed picture on Monday, with gains in the tech sector partially offsetting declines in materials as a busy earnings week gets underway. The ASX200 edged up 0.22 per cent to 8937.1, a result shaped by contrasting fortunes across key sectors.
Mining Sector Under Pressure
The materials sector bore the brunt of Monday’s losses, dragged down by falling iron ore futures and operational setbacks at major players. BHP’s share price dipped 1.5 per cent as Singapore iron ore futures hit multi-month lows. Rio Tinto experienced a more significant fall of 4.1 per cent following the suspension of operations at a Guinea iron ore mine due to a worker fatality. Fortescue and Bluescope also contributed to the sector’s downturn, declining by 4.7 per cent and 2.7 per cent respectively.
Gold Holds Steady Amid Global Uncertainty
Despite the broader materials weakness, gold prices showed resilience over the weekend, providing a lift to some gold miners. Northern Star Resources saw a modest increase of 0.3 per cent, while Evolution Mining and Gold Corporation experienced slight declines of 1.6 per cent and 0.1 per cent. Analysts at Dorex attribute the gold price stability to keenly awaited US economic data and ongoing global macroeconomic uncertainty.
“Gold futures briefly pushed back above the key $US5000 per ounce mark,” Dorex analysis noted, “driven by a softer US dollar, continued macro uncertainty and renewed central bank buying narratives.”
Tech Rebounds, Retail Shows Resilience
The tech sector staged a recovery, gaining 5.6 per cent after experiencing significant losses in recent weeks. This rebound was supported by bargain hunting amid dented tech prices both locally and on Wall Street. JB Hi-Fi shares jumped 7.5 per cent, buoyed by strong conclude-of-year sales. However, EToro analyst Zavier Wong cautioned that sales growth may moderate as the impact of recent rate hikes becomes more pronounced.
Other Notable Movers
Aurizon saw a substantial increase of seven per cent after abandoning plans to sell a stake in its Queensland rail network, alongside a one-third increase in interim dividends. A2 Milk also performed well, lifting full-year revenue projections and experiencing a 6.8 per cent share price rise. Conversely, Treasury Wine Estates faced challenges, reporting a $649m first-half loss and suspending interim dividends, resulting in a 5.1 per cent share price dip. Ansell, a medical protective equipment manufacturer, posted surprising profit results and gained 3.8 per cent through cost-cutting measures.
Interest Rate Outlook and Economic Data
Looking ahead, Tuesday’s release of RBA minutes and Thursday’s employment data are expected to reinforce the central bank’s recent decision to hike interest rates. Markets currently predict a 91 per cent chance of a cash rate hold next month. Analysts anticipate a softer January unemployment print, potentially easing some pressure on the RBA to continue raising rates, but emphasize that broader labour market conditions remain tight.
FAQ
Q: What caused the decline in the mining sector?
A: Falling iron ore futures and operational issues at Rio Tinto’s Guinea mine were the primary drivers of the decline.
Q: Why did the tech sector rebound?
A: The tech sector rebounded due to bargain hunting after recent price declines.
Q: What is the current outlook for interest rates?
A: Markets predict a 91 per cent chance of a cash rate hold next month, but the RBA maintains a hawkish stance due to tight labour market conditions.
Q: What impact did the fatality at Rio Tinto have on their share price?
A: The suspension of operations at the Guinea mine following the fatality led to a 4.1 per cent fall in Rio Tinto’s share price.
Did you know? Aurizon’s decision to abandon the sale of its rail network stake was accompanied by a significant increase in interim dividends, boosting investor confidence.
Pro Tip: Retain a close eye on upcoming economic data releases, such as the RBA minutes and employment figures, as they can significantly influence market sentiment.
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