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Highlights
- Australian markets follow Wall Street's lead as strong US job data pressures interest rate expectations.
- Financial and technology stocks weigh down ASX performance.
- Insignia (IGL) gains as the company receives a takeover offer.
The Australian sharemarket faced a dip on Monday, following a downturn in US markets, influenced by stronger-than-expected employment data from the US. The S&P/ASX 200 index dropped by 0.9% to 8222 points by midday AEDT, tracking the significant losses observed on Wall Street late last week. The All Ordinaries Index mirrored this decline, reflecting the same negative sentiment. The slump followed a 1.5% drop in the US S&P 500 Index, which reacted sharply to US non-farm payrolls that exceeded expectations. The economy added 256,000 jobs in December, surpassing forecasts of 164,000. This news seemed to diminish expectations for an imminent interest rate cut from the Federal Reserve.
This shift in outlook reverberated across the ASX, especially impacting sectors sensitive to interest rate moves. Major banks and technology stocks took a hit, contributing significantly to the day’s losses. Commonwealth Bank (ASX:CBA) dropped 1.7%, NAB (ASX:NAB) fell by 1.6%, and ANZ (ASX:ANZ) weakened by 1.2%. The technology sector saw similar pressure, with software giant WiseTech (ASX:WTC) falling 2.3%.
In the retail sector, disappointing news from Myer (ASX:MYR) triggered a sharp decline. After the company posted a weak trading update, its shares plummeted by 17%, pulling down other retailers with them. Premier Investments (ASX:PMV) saw its stock drop by 16%, further signaling challenges in the retail space.
Despite weakness in several sectors, energy stocks displayed resilience. A significant increase in Brent crude prices, which reached a four-month high of $81 per barrel, boosted energy stocks, particularly after new US sanctions against Russia. This led to gains for major players such as Woodside (ASX:WDS), which rose 2.2%, and Santos (ASX:STO), climbing 1.9%.
Notable moves in the corporate sphere saw Insignia (ASX:IGL) rally by 2.4%. This came after the company announced it had received an offer from Bain Capital, seeking to acquire its shares for $4.30 each, aligning with a previous bid by CC Capital. In contrast, Novonix (ASX:NVX) shares fell 4.2% following a decision by the US Department of Energy to deny the company access to key tax credits and loans that would have supported its Tennessee-based operations.
Other movers included Flight Centre (ASX:FLT), which saw a 1.5% rise following an "overweight" recommendation from Morgan Stanley, and NRW Holdings (ASX:NWH), whose stock slumped 7.9% after its CFO resigned.
