Australian Economy

ASX down as tech stocks fall, US stocks close higher before Snap tanks

The Australian share market closed lower on Tuesday, while Tabcorp’s share price crashed following the company’s demerger. 

The ASX 200 fell 0.3 per cent to 7,128, while the broader All Ordinaries index dropped 0.3 per cent to 7,373.

The top-performing stocks in this index are Liontown Resources and Virgin Money UK, up 4.63 per cent and 3.50 per cent respectively.

Tabcorp was the worst-performing stock, down 81.3 per cent, followed by Nufarm, which lost 14.4 per cent.

Tabcorp’s lucrative lottery and Keno businesses have been spun off into a separate listed entity called The Lottery Corporation. 

As a result, Tabcorp will retain its less-profitable wagering, media and gaming services businesses.

The Australian dollar lost 0.3 per cent, at 70.83 US cents.

More sectors were lower than higher, despite the gain in the ASX 200 Index. The financial sector was leading the gains, up 1 per cent and rebounding from its recent decline.

CBA rose by half a per cent, Westpac gained 0.7 per cent, ANZ added 0.4 per cent and NAB was up 1.2 per cent.

Tech was the worst-performing sector, losing 3 per cent. Block was down 6.3 per cent, Wisetech Global fell 2.4 per cent, Computershare lost 1.6 per cent and Xero dropped 2.1 per cent.

Consumer confidence up on low unemployment 

Consumer confidence increased 1.7 per cent last week, after a 7.7 per cent decline over the past four weeks, according to the ANZ-Roy Morgan consumer confidence index.

ANZ Head of Australian Economics, David Plank, said the rise in the index was mainly driven by more people becoming confident about their “financial conditions over the next year” along with more respondents saying it is a “good time to buy a major household item”.

“News that unemployment had fallen below 4 per cent may have contributed to the lift in sentiment, even if the Q1 wage data disappointed,” Mr Plank noted.

“Household inflation expectations remained elevated at 5.3 per cent, as average petrol prices rose sharply last week.”

Most of the survey was conducted before the federal election results were known.

The reaction to the election will be captured in next week’s index.

Snap tanks after the bell 

Shares in social media company Snap — creator of the app Snapchat — plummeted 30 per cent in after-hours trading after warnings that it would miss its own revenue targets.

The news follows statements by companies including Uber Technologies and Facebook-owner Meta Platforms earlier this month that they would rein in costs and hiring.

In the memo, chief executive Evan Spiegel said Snap would evaluate the rest of this year’s budget and “leaders have been asked to review spending to find additional cost savings”.

On Wall Street, the Dow Jones index added 2 per cent, to 31,880, the benchmark S&P 500 gained 1.8 per cent, to close at 3,973, while the Nasdaq also fell by 1.6 per cent, to 11,535.

Oil prices slid and gold extended recent gains, but the US dollar fell further as investors cut their bets on more greenback advances, based on market expectations for rising yields as the Federal Reserve tightened money supply.

The rally lifted all 11 S&P 500 sectors and put the benchmark on track for its first week of gains after seven consecutive weekly losses on fears of a looming slowdown.

However, many analysts say the equities downturn is not over.

Steven Ricchiuto, US chief economist at Mizuho Securities, said stock investors were under the illusion that the Federal Reserve will rescue the market from further decline by easing monetary policy.

“It’s going to be a very, very sluggish growth environment and the Fed’s not going stand in the way of it,” Mr Ricchiuto added.

The yield on 10-year Treasury notes rose 7.7 basis points, to 2.8 per cent, after a more-than 40-basis-point decline from a multi-year high of 3.2 per cent set two weeks ago.

Other analysts also see the equity market in difficulty.

Oil prices were little changed as worries over a possible recession offset an outlook for higher fuel demand with the upcoming US summer driving season and Shanghai’s plans to reopen after a two-month COVID-19 lockdown.

US crude oil futures were down 1.1 per cent in afternoon trade, at $US109.03 a barrel, and Brent slipped 1.1 per cent, at $US112.19.

Gold prices climbed as weakness in the US dollar and economic growth concerns lifted the metal, although non-yielding bullion showed some gains after Treasury yields rose.

US gold futures were up 0.3 per cent, at $1,853.40 an ounce.

In Europe, the pan-European STOXX 600 index gained (+1.2 per cent), along with Germany’s DAX (+1.4 per cent) and Britain’s FTSE (+1.6 per cent).


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