How is ASX 200 responding to US Fed remarks?


  • The ASX 200 traded lower by 35.20 points or 0.48% at 7,351, weighed down by sharp selling in materials and energy stocks.
  • The market sentiment was dampened by report that the US Fed may announce sooner-than-expected rise in interest rates.
  • Ten of the 11 sectors traded lower, with materials falling the most by 2.14%.
  • Whitehaven Coal shares declined as much as 9.55% on cut in production guidance for FY21.
  • Australia’s unemployment rate dropped to 5.1% in May, from 5.5% a month ago. 

The Australian share market continued to trade in the red by Thursday afternoon, tracking weak cues from global peers, after the US Federal Reserve kept the interest rates unchanged but indicated sooner-than-expected rise in rates. The looming fear of interest rate hike left investors jittery as hike in rates may push inflation. 

The ASX 200 is trading lower by 35.20 points or 0.48% at 7,351, led by sharp selling in materials, energy and consumer staples stocks. Earlier today, the index opened lower, snapping its two-session gaining streak.

Meanwhile, Australia’s unemployment rate dropped to 5.1% in May, from 5.5% a month ago. The number of jobs added to the economy rose by 115,200 compared to a decrease of 30,600 jobs in April. The number of full-time jobs added to the economy reached 97,500 as against 33,800 a month ago, while participation rate rose to 66.2%.


The Mid Market Pulse || How ASX Is Responding To Mounting Inflation Concerns?


The market witnessed broad-based selling as ten of the 11 sectors were trading lower, with materials falling the most by 2.14%. Other sectors that were in the red include information technology, utilities, healthcare, financial, A-REIT, consumer discretionary, consumer staples and telecommunications services. 

Bucking the trend, the financial sector rose over 1% after the Reserve Bank of Australia (RBA) governor Philip Lowe said that “it is time to be thinking about how we (economy) transition from recovery mode to expansion mode.” Lowe also said that the CPI inflation would temporarily rise in the June quarter to around 3.5%.

Boosted by the development, banking stocks saw a surge in buying, with big four lenders - Westpac Banking Corporation (ASX:WBC) , Commonwealth Bank of Australia (ASX:CBA), Australia and New Zealand Banking Group Limited (ASX:ANZ) and National Australia Bank Limited (ASX:NAB) - rising up to 1%.

The Australian energy index AXEJ dropped 1.5%, snapping a three-session gaining streak on subdued crude oil prices. Sector heavyweight Woodside Petroleum Limited (ASX:WPL), Oil Search Limited (ASX:OSH) and Santos Limited (ASX:STO) fell up to 2%.

Top gainers and Losers

Financial company Netwealth Group Ltd (ASX: NWL) is the top performer on the ASX with 8% gain. Some of the other notable gainers are Austal Limited (ASX:ASB), Nuix Limited (ASX:NXL), Codan Limited (ASX:CDA) and Computershare Ltd. (ASX:CPU).

Meanwhile, coal mining company Whitehaven Coal (ASX:WHC) is the top percentage loser on the ASX, sinking nearly 10%. Some of other worst performers are Northern Star Resources Limited (ASX:NST), Ramelius Resources Limited (ASX:RMS), Redbubble Ltd. (ASX:RBL) and Sims Ltd. (ASX:SGM) , falling between 5% to 6.5%.

Shares in News

Shares of Whitehaven Coal Limited (ASX:WHC) declined as much as 9.55% in opening deals to A$1.845 after the company cut production guidance for the second time for FY21. Australia’s largest independent coal producer, however, reaffirmed its managed coal sales and unit costs guidance within its previous range. The company has lowered run-of-mine (ROM) production estimates for FY21 to 20.4 million tonnes, from its previous guidance of between 20.6 million tonne and 21.4 million tonne (MT). while the company has reaffirmed managed coal sales guidance for the current fiscal to 17.9Mt, the unit cost guidance for FY21 has been projected at AU$74 per tonne.

The share price of Bod Australia Limited (ASX:BDA) rose as much as 5.6% to 38 Australian cents after the natural skincare and health products maker stated it has broadened its sales footprint in the United Kingdom via two new online retailers.

Shares of Australian broadcaster Seven West Media Limited (ASX:SWM) jumped as much as 7.5% to 43 Australian cents on strong earning outlook for FY21. The company expects annual underlying core earnings to range from AU$250 million to AU$255 million, against AU$129.6 million last year, helped by a strong rebound in fourth-quarter advertising revenue. The firm expects advertising revenue to grow more than 45% in the fourth quarter, suggesting a continuing positive momentum into the next quarter.

Sonic Healthcare Limited (ASX:SHL) shares traded flat with marginal gains at AU$36.68 after the company signed a binding agreement to acquire 100% of Canberra Imaging Group (CIG). The settlement of the transaction is expected in the first quarter of FY 2022, and the acquisition will be funded from cash and available debt lines.

Shares of Coles Group Ltd (ASX:COL) dropped 4% to AU$16.35 after the company said the benefits from its “smarter selling” program may exceed AU$200 million in FY22.

Centuria Capital Limited (ASX:CNI) announced that it has a keen interest in greater than 90% of Primewest securities. It now intends to exercise its right to acquire any outstanding Primewest securities compulsorily.

Latin Resources Limited (ASX:LRS) has updated the market on its various projects and ongoing exploration activities in the highly prospective Lachlan Fold belt of New South Wales (NSW). The Company has secured three new tenements totalling some 570km in the heart of the NSW Lachlan Fold Belt, near the Cadia Mine and the McPhillamys Gold Project.

Rhythm Biosciences Limited (ASX:RHY) shared on Thursday that it has been invited to present at the MST Access Australian Micro & Small Caps Conference 2021. Rhythm Biosciences is a transformative, predictive diagnostics company, specialising in early cancer detection.

Asian Markets open in the Red

Asian markets are trading lower in opening deals, barring China, following weak cues from Wall Street which closed lower in overnight trade. The market sentiment was dented by the report that the US Federal Reserve may announce sooner-than-expected rise in interest rates.

The Mainland Chinese stocks are trading higher with the Shanghai Composite gaining 0.04%, and the Shenzhen component rising 0.8%.

Japan's Nikkei was the worst performer in the region with 1% loss, followed by Seoul's KOSPI which dropped 0.5%.

Taiwan’s Weighted Index shrank 0.45% and the Straits Times index in Singapore slipped 0.3%. Hong Kong’s Hang Seng was down 0.15%.

In the overnight trade on Wednesday, all the three major US stocks ended lower. The Dow Jones fell 0.8%, the S&P 500 dropped 0.55%, and the NASDAQ dipped 0.25%. The Fed said that it expects the first post-coronavirus rate hike to happen in 2023.





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