In response to a sharp sell-off in the US overnight, the local sharemarket snapped three straight days of gains and posted its biggest loss in over a month, with the ASX 200 falling 1.8 per cent or 128.8 points to 6857.9. Losses were broad, with 10 sectors and 90 per cent of stocks in the ASX 200 losing ground. The Mining sector (down 3 per cent) weighed the most, and the heavy-weight Financials sector closely followed, with a decline of 1.5 per cent.
Early this morning, the US Federal Reserve raised interest rates by 75 basis points to near 15-year highs. At the press conference that followed, the Federal Reserve’s Chair, Jerome Powell, flagged a strong likelihood of more rate hikes ahead, and mentioned that ‘incoming data suggests that the ultimate level of interest rates will be higher than previously expected’. The US sharemarket fell following his comments, driving the S&P 500, Nasdaq and Dow Jones indices to post their biggest daily decline in just under a month.
On the company front, Woolworths (WOW) released a quarterly update. It posted a slight (1.8 per cent) improvement in its total sales, but noted a modest slip (0.5 per cent) in its Australian Food sales. WOW also mentioned that its average food prices for its Australian division increased by 7.3 per cent. Shares tumbled 3.5 per cent amid a broader sell-off, its worst performance since May.
However, there were some winners today. The a2 Milk Company (A2M) was amongst the best performers in the ASX 200 after it received approval from the US Food and Drugs Administration (FDA), to import its milk products to the US for the next few months. The company however believes its gross margins may take a hit, partly because of air freight and rework costs. A2M shares rose 4 per cent.
Money manager Perpetual (PPT) climbed for the fifth straight day and added another 7 per cent, marking itself as today’s best performer. PPT received and rejected a takeover offer from a consortium comprising BPEA Private Equity Fund VIII and Regal Partners, after determining that the takeover price of $30-per-share ‘materially undervalues’ the company.
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Coal miner New Hope Corporation (NHC) announced an onmarket share buy-back ‘for up to $300 million’, commencing November 17. NHC expects ‘strong cash generation to continue’ and is taking steps to ‘strengthen its balance sheet’ and ‘return surplus capital to shareholders’. Shares of NHC improved by 5.9 per cent today, and are up 6.8 per cent so far over the week.
Bravura Solutions (BVS) shed 52 per cent after releasing a worse-than-expected trading update.
The US earnings season continues with Starbucks & Moderna among some of the companies expected to release earnings.
Today, 3.1bn shares were traded, worth $6.8bn. 469 stocks rose, 880 fell & 375 finished unchanged.
Originally published by Divik Nigam – (Author), CommSec
