ASX 200 closes 0.4% lower, energy and materials fall as commodities dive

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ASX 200 closes 0.4% lower, energy and materials fall as commodities dive

 ASX 200 closes 0.4% lower, energy and materials fall as commodities dive
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  • ASX 200 kicked off the new financial year on a lower note, dropping 0.4% by market close.
  • Energy and materials stocks dragged ASX 200 lower affected by commodity blues.
  • Australian dollar hit a two-year low while US dollar edged higher.

The Australian benchmark index ASX 200 dropped 0.4%, to 6539.9 on the new financial year’s first trade session. While the Australian market was edging higher during early hours, heavy selling by market close made the index stoop down by trade close. Energy and material stocks pulled the index down as they aligned to the drop in commodity prices. Even the Australian dollar hit its two-year low today. In this week, the ASX 200 index has lost 0.62%, standing over 10.62% below its price 52-weeks before.

Interestingly and contradictory to the current situation, CommSec has reportedly predicted a rebound in Australian shares in the new financial year, supported by a strong domestic economy and easing inflation.

Market movers

  • Shipbuilder Austal’s (ASX:ASB) share price surged 26% by mid-afternoon after it bagged a contract with the US Coast Guard service. The contract has a potential value of US$3.3 billion. As of now, the first vessel has been contracted for, with options of extension to 10 more vessels.
  • From the laggard energy sector, Woodside Energy (ASX:WDS) lost 4.4% while BHP Group (ASX:BHP) lost 2.9%. Oil prices were lower, casting a shadow on the Australian energy companies.
  • In the materials sector, a decline in iron, copper, and gold prices saw ASX mining stocks lose pace. Rio Tinto (ASX:RIO) dropped 1.3% while Fortescue Metals (ASX:FMG) declined 1%. Notably, gold miner Ramelius Resources (ASX:RMS) defied the commodity pulldown and gained over 4% on reports of billionaire Andrew Forrest abandoning plans to increase his stake in the company.
  • From A-REITs, Ingenia Communities (ASX:INA) lost 0.753% and remained in media headlines for lowering its FY22 guidance.
  • Under financials, Openpay (ASX:OPY) was buzzing after it decided to pause its US operations and loan origination on Opy platform, indefinitely. OPY shares gained over 20% on the company’s decision to focus on its growing Australian business.

Other noteworthy trends

Market Volatility indicator- A-VIX was down 1.08%. All-Ordinaries index followed along, shedding 0.39%. Large caps symbolised by ASX 50 index (XFL) lost over 0.598% while ASX Midcap 50 index (XMD) gained 0.146% and Small Ordinaries index (XSO) closed 0.403% higher. 

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Global markets

In the US, treasuries advanced on lower-than-expected US consumer spends. The 10-year yield was just above 3% and US dollar inched higher.

In Asia, tocks struggled to move higher as investors seemed worried about an economic slowdown. Shares in Japan fell as Nikkei index ended trade lower. However, neighbour South Korean KOSPI stood strong.  Hong Kong’s markets remained closed, marking the 25th anniversary of Chinese rule. Chinese equities sparkled with gains as CSI 300 Index took off. Easing Covid curbs and brighter economic signals pushed for the rebound.

European stock markets, on the other hand, are expected to open lower as investors seem fussy over the global economic outlook. Meanwhile, central banks are tightening monetary policies to combat peaking inflation.

 Commodities world

  • Oil prices were lower as fears of a demand slowdown and recession gripped investors. Both benchmarks Brent and WTI tracked third straight weekly losses.
  • Metals like iron and copper were also routed south on a weak demand expectation.
  • Fed’s rate hikes weighed heavily on the yellow metal, gold. Reportedly, bullion’s value dropped over 8% in the second quarter.
  • Meanwhile in the crypto world, Bitcoin jumped back and retook the seemingly significant US$20,000 level.


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