Australian share market finished session with a mixed note on Tuesday, 12 July 2022, as gains in energy and financial stocks offset by weakness in mining and technology stocks.
At closing bell, the benchmark S&P/ASX200 advanced 4.13 points, or 0.06%, to 6,606.28. The broader All Ordinaries index fell 5.72 points, or 0.08%, to 6,786.84.
Market sentiments rattled on renewed Covid concerns after Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant. China had discovered its first case of a highly transmissible Omicron sub-variant in Shanghai and that new cases had jumped to 63 in the China’s largest city from 52 a day earlier.
Traders were nervous that the discovery of the new sub-variant and the highest number of daily new cases in Shanghai since May could lead to another round of mass testing, and more Covid lockdowns may lie ahead.
Investors are also bracing for the macro data including U. S. consumer inflation on Wednesday, and comments from Federal Reserve Officials later in the week that could throw light on the path of monetary policy in the US. A high inflation reading would add pressure for the Fed to step up its already aggressive pace of interest rate increases.
Rate-sensitive financial stocks advanced, with the Big Four banks Commonwealth Bank of Australia, National Australia Bank, Westpac Banking and Australia and New Zealand Banking Group up between 0.1% and 1.4%.
Mining stocks dropped as persistent concerns about weak demand in top steel producer China hurt iron ore prices. Sector majors BHP and Fortescue Metals Group declined 1.2% and 0.2% respectively, while rival Rio Tinto was up 0.1%.
In company news, Zip Co (ZIP) added 6% after it terminated its proposed acquisition of fellow buy-now-pay-later company Sezzle (SZL).
The mutual agreement to terminate the acquisition is on the back of current macroeconomic and market conditions. ZIP will pay US$11 million as a result of the termination.
In economic news, the National Australia Bank (NAB) business confidence index fell from +6.3 points in May to a 6-month low of +1.4 points in June (long-run average: +5.4 points). In terms of costs and price pressures (inflation), purchase cost growth (up 4.8%) and labour cost growth (up 3.6%) both hit record highs in June.
The weekly ANZ-Roy Morgan confidence surveys were released today. Sentiment, as measured by ANZ and Roy Morgan, fell by 2.5% last week to 81.6 points. Notably, consumer inflation expectations over the next two years hit a 15-week high of 6%. Westpac’s consumer sentiment index fell by 3% in July, with confidence sliding by 19.7% since December.
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