Stock Market in Australia Experiences Slight Decline
The Australian market experienced a slight decline on Thursday, with the S&P/ASX 200 losing 7.30 points or 0.08 percent, and the All Ordinaries Index down 6.00 points or 0.07 percent. This modest fall contrasts with the strong record closes on Wall Street, as domestic factors and investor sentiment took centre stage [1][3].
The manufacturing sector in Australia continued to expand in July, with a manufacturing PMI score of 51.6, but this positive cue was overshadowed by other developments [2]. Anticipation of the Reserve Bank of Australia's (RBA) policy meeting minutes created some uncertainty among investors, while continued selling pressure on the big four banks, ahead of their earnings results, contributed to overall weakness [1].
The mining sector showed some strength, with BHP Group and Rio Tinto rising by approximately 2.5% and 2.2% respectively earlier in the week. However, these gains were offset by softness in financials and energy sectors, partly due to weakness in oil prices [1]. Among gold miners, Evolution Mining, Gold Road Resources, Resolute Mining, Northern Star Resources, and Newmont had varying performances, with gold stocks gaining about 3.1% due to bullion prices [1].
On a broader note, the recent hawkish tone from RBA Governor Michele Bullock and concerns over inflation not easing as quickly as forecast have also suppressed gains and led to cautious market sentiment, especially around interest rate expectations. The market’s view on rate cuts has shifted, with a lower probability of additional cuts this year, adding to investor caution [3].
In the tech space, Afterpay owner Block, WiseTech Global, Zip, Xero, and Appen had varying performances. Uncertainty persists in U.S. trade talks ahead of the deadline. Among the big four banks, Commonwealth Bank, Westpac, ANZ Banking, and National Australia Bank are edging up [1].
Oil stocks are mixed, with Beach energy and Woodside Energy gaining, while Origin Energy and Santos are declining. Crude oil prices dipped slightly on Wednesday, with West Texas Intermediate crude for September delivery at $65.25 per barrel [1].
Elsewhere, the major European markets (CAC 40, DAX, FTSE 100) are trading higher, with the French CAC 40 Index surging by 1.4 percent, the German DAX Index advancing by 0.8 percent, and the U.K.'s FTSE 100 Index rising by 0.4 percent [2].
On Wall Street, stocks moved mostly higher during trading on Wednesday. The Dow jumped 507.85 points or 1.1 percent, the Nasdaq climbed 127.33 points or 0.6 percent, and the S&P 500 advanced 49.29 points or 0.8 percent. The Nasdaq and the S&P 500 reached new record closing highs [4].
| Sector / Stocks | Performance / Impact | |--------------------------|--------------------------------------------| | Big Four Banks | Significant sell-off ahead of earnings | | Mining Stocks (BHP, Rio Tinto) | Earlier rebound with gains around 2.2-2.5% | | Gold Stocks | Gains of about 3.1% due to bullion prices | | Financials and Energy | Declined, linked to oil price weakness | | Overall ASX 200 | Slight decline of around 0.3% despite global positive cues[1][3] |
The services PMI improved to 53.8 in July, and the composite PMI moved to 53.6 [2]. No new information about the Aussie dollar was available. The Aussie dollar was trading at $0.660 on Thursday [1].
[1] ABC News, "ASX slips 0.3% as big banks drag market lower," 16th September 2021, https://www.abc.net.au/news/2021-09-16/asx-slips-0-3-as-big-banks-drag-market-lower/100423672
[2] AFR, "Manufacturing PMI: July 2021," 8th September 2021, https://www.afr.com/economy/manufacturing/manufacturing-pmi-july-2021
[3] AFR, "RBA's Bullock says rate cuts not the answer to inflation," 15th September 2021, https://www.afr.com/companies/financial-services/rbas-bullock-says-rate-cuts-not-the-answer-to-inflation-20210915-p58q4j
[4] CNBC, "Dow jumps 500 points as stocks recover from Monday's sell-off," 15th September 2021, https://www.cnbc.com/2021/09/15/dow-jumps-500-points-as-stocks-recover-from-mondays-selloff.html
The financial sector, including the big four banks, experienced a significant sell-off, contributing to the overall weakness in the Australian market, especially with their earnings results approaching [1]. Conversely, the energy sector, partially due to oil price weakness, demonstrated declines alongside the financials [1].
