Market Decline as Westpac Downgraded and Star Entertainment Struggles

Highlights

• The ASX market sees a decline, led by financials.
• Iron ore price rise boosts mining stocks despite overall losses.
• Westpac (WBC) faces a downgrade, while Star Entertainment (SGR) faces major challenges.

On Friday, Australian stocks faced a decline as major banks in the financial sector dropped significantly, while mining stocks saw limited relief despite the boost in iron ore prices. The S&P/ASX 200 Index had a strong start but quickly reversed course, trading 0.5% lower at 8287.1 points by early afternoon. Of the 11 sectors, 10 ended in the red, with the banking sector the hardest hit.

The Australian dollar showed some strength, trading at US$61.99¢, marking a 17¢ rise from its recent two-year low. Meanwhile, the US market saw slight indications of a future decline due to concerns over persistent inflation and employment figures that suggested economic pressure.

Within Australia's financial market, inflation concerns appeared to be more subdued compared to international expectations. Following Westpac's (ASX:WBC) downgrade by analysts at Morgan Stanley, the bank’s stock fell by 1.9%. Other major banks in the sector also saw losses: Commonwealth Bank (ASX:CBA) dropped by 1.5%, NAB (ASX:NAB) by 1.2%, and Macquarie (ASX:MQG) by 1.4%. Despite the downward trend in the banking sector, ANZ (ASX:ANZ) experienced less of a pullback, as Morgan Stanley upgraded the bank to an "equal weight" with a target price of $27.80, providing a more optimistic outlook amidst the broader market drop.

On the commodities front, iron ore prices were up, reaching US$97.2 per tonne, maintaining momentum with a 0.6% increase. As a result, big mining stocks experienced growth. Rio Tinto (ASX:RIO) was the largest gainer in the sector, increasing by 2.1%. Other notable miners like BHP (ASX:BHP) rose by 1.3%, and Newmont Corporation (ASX:NEM) saw an uptick of 1.2%. Iluka Resources (ASX:ILU), a critical minerals player, saw a strong 3.7% growth following the upward trend in mineral prices.

However, it wasn’t all good news on the ASX, as Star Entertainment (ASX:SGR) experienced severe turbulence. The casino operator's shares tumbled by a substantial 17.7%, adding to losses from the previous day. If the company is unable to secure a lifeline deal soon, it could face the risk of voluntary administration, with lenders already warning about its precarious financial situation. In contrast, other companies like Insignia Financial (ASX:IFS) experienced gains, climbing by 2.2%, even as rumors swirled about potential bidders eyeing the company.

Additionally, companies like Mesoblast (ASX:MSB) and Novonix (ASX:NVX) also saw declines. Mesoblast, under a trading halt, saw a 4% drop, while Novonix fell 2.1% after finalizing a technology licensing agreement with Harper International.

The day’s mixed performances underscored the complex dynamics of the Australian stock market, as sectors like mining provide some refuge from significant declines in banking and gaming stocks.