Novartis falls, Wall Street closed, ASX set to slip
Staff writers
Updated ,first published
The Australian sharemarket slipped below the 9000-mark in early trade on Tuesday, tracking a fall in Europe where stocks were weighed down by another jump in oil prices.
The S&P/ASX 200 was down 60.40 points, or 0.7 per cent, at 8950.50 as of 10.53am AEST, with all 11 sectors in the red. The ASX edged 0.1 per cent higher on Monday. The Australian dollar was trading higher at US72.18¢. Wall Street was closed for the Labor Day holiday.
With the war in the Middle East escalating again, oil prices kept pushing higher, adding to an already difficult inflationary backdrop.
Brent crude advanced toward $US98 a barrel following the largest exchange of tanker attacks between Iran and the US. Traders also assessed reports of hits on Saudi Arabian oil infrastructure on the Red Sea and a potential accord between Iran and Oman to manage shipping through the Strait of Hormuz, which could tighten Tehran’s control over the crucial waterway.
The rising fuel costs are driving up inflation, which could force central banks such as the Federal Reserve and Australia’s Reserve Bank to push up interest rates further. Higher rates raise borrowing costs for businesses and consumers, weighing on companies’ profits and share prices.
A packed week of US data culminates with Friday’s inflation report for the world’s largest economy, which may prove pivotal to whether the Fed raises rates or stays on hold.
“Markets will be adjusting their positioning heading into the Fed’s blackout period,” said Geoff Yu, a senior macro strategist at BNY. “The risk is the Fed turning hawkish and that will be reflected in equities.”
The strong oil price failed to push up the energy sector in early trade. The nation’s biggest oil stock, Woodside, was down 0.4 per cent, while Santos and refiner Ampol rose 0.4 per cent and 1 per cent, respectively. Coal producers Yancoal and Whitehaven, who can benefit as investors are looking to other fossil fuel sources during spiking oil prices, dropped 0.6 per cent and 0.5 per cent, respectively.
However, the mining and financial heavyweights – which combined make up more than half of the entire ASX – struggled. None of the big four banks were in the green, with Commonwealth Bank shares falling 0.9 per cent, National Australia Bank and Westpac both dropping 0.5 per cent and ANZ Bank losing 1.2 per cent.
Iron ore and copper giants BHP and Rio Tinto were down 0.3 per cent and 0.9 per cent, respectively, even as copper surged to its highest-ever price on the London Metal Exchange after a weeks-long rally fuelled by anticipation that President Donald Trump will expand US tariffs to imports of refined metal. Pure-play iron ore producer Fortescue Mining lost 1 per cent. BlueScope Steel slumped 4.8 per cent as its stock traded without the right to its latest dividend for the first time.
Sectors dependent on consumer spending and affordable borrowing costs were firmly down in early trade. Bunnings and Officeworks owner Wesfarmers lost 0.7 per cent and furniture seller Harvey Norman dropped 0.2 per cent, while supermarket giants Woolworths and Coles were down 0.8 per cent and 0.7 per cent, respectively.
Tech companies, which rely on affordable debt to ramp up their R&D and investments in AI, also retreated. Software makers Xero and WiseTech shed 1.4 per cent and 1.5 per cent, respectively, and AI data centre operator NextDC dropped 1 per cent.
Overnight in Europe, the Stoxx Europe 600 Index was little changed at the close in London. Energy stocks outperformed, while the media and insurance sectors were among the biggest laggards. US stock futures fell in cautious trading. S&P 500 futures dropped 0.2 per cent while Nasdaq 100 contracts gained.
Novartis shares fell 3.2 per cent, the most they have retreated since April on news that pelacarsen, a potential blockbuster cholesterol drug, failed in a final-stage study. Semiconductor supplier SOITEC rose 12 per cent, outperforming peers in a strong day of trading for AI-adjacent names including Infineon Technologies, which gained 6.9 per cent after an upgrade at MP Capital Markets.
Europe’s sensitivity to energy prices hasn’t stood in the way of a strong second-quarter earnings season and an overall constructive mood among investors that’s rooted in upbeat macroeconomic data. The benchmark Stoxx 600 is less than 2 per cent away from its all-time closing record, though it has edged lower in three out of the past four weeks.
“There is a clear cyclical recovery in manufacturing,” said Geoff Yu, a senior macro strategist at Bank of New York Mellon. “Valuations and positioning also help, but it feels like the market is tactical, and of course energy costs this winter will be problematic.”
In other single stocks, Nordex shares rose as much 12 per cent after the wind turbine maker was upgraded at Bank of America.
Meanwhile, a blockchain used by several cryptocurrency exchanges to move Bitcoin has been hacked for $US320 million ($445 million), the latest in a spate of breaches to shake confidence in digital-asset security. Roughly 4,000 of the 4,200 Bitcoin held in a wallet used by Liquid Network were taken, the platform operator said in a post on X.
It said the perpetrators appear to be “white-hat hackers” who exploit security flaws and typically return the funds, sometimes in exchange for a fee.
with Bloomberg
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