The Australian stock market showed modest improvement this morning after a tumultuous session on Wall Street and a rough day on the ASX yesterday. The ASX 200 opened slightly higher, making gains in the Information Technology and Real Estate sectors, while Energy stocks struggled.
ASX 200 Performance Early in the Day
Early in Thursday’s session, the benchmark ASX 200 index rose by 0.5%. This upward movement was driven primarily by significant gains in the tech and real estate sectors. However, by midday, the momentum started to fade as Energy stocks experienced significant losses, leaving investors cautious.
By lunchtime, the ASX 200 had climbed just 0.16%, reaching 7,963.5. Meanwhile, the broader All Ordinaries index saw a modest 0.13% gain to 8,167.7.
Energy Sector Faces Heavy Losses
The Energy sector endured a tough session, declining by a concerning 3.5% by midday. Leading the downturn was industry giant Woodside Energy (ASX
), whose shares plummeted 6.7% after going ex-dividend. Shareholders are receiving $1.01 per share in dividends, but Woodside’s overall performance has been bleak. The company’s shares have declined by over 19% this year and nearly 35% over the past 12 months. Falling crude oil prices have compounded Woodside’s troubles, with WTI crude dropping below US$70 per barrel and Brent crude hovering just above US$73 per barrel. Over the past week, WTI crude has fallen by 8.3%, and Brent has dropped by 7.3%.
Iron Ore Prices Slip as Demand from China Declines
Adding to the market’s challenges, iron ore prices continue to decline. The Singapore iron ore futures fell by another 1.4% overnight, approaching the critical US$90/tonne threshold. Softening demand from China, a major consumer of iron ore, is driving this downward trend, affecting Australian miners and exporters.
ASX Sector Overview at Midday
The table below highlights the performance of major ASX sectors by midday:
Sector | Change (%) |
Information Technology | +1.83% |
Real Estate | +1.50% |
Financials | +0.91% |
Energy | -4.13% |
Materials | +0.10% |
Utilities | -1.79% |
While the tech and real estate sectors showed resilience, Energy and Utilities suffered sharp declines.
Tech Sector Outperforms, Boosted by NextDC
The Information Technology sector emerged as the standout performer, rising 1.83%. Data centre company NextDC (ASX: NXT) was the driving force behind this surge, with its stock skyrocketing by 8.87% to $17.495. The impressive performance came on the back of news that Robin Khuda, CEO of unlisted competitor AirTrunk, became Australia’s newest billionaire following the sale of his company to Blackstone for a staggering $23 billion.
The tech sector’s strength helped offset broader market volatility, with companies like Audinate Group (ASX), up 5.11%, and Clarity Pharmaceuticals (ASX), up 4.48%, also making notable gains.
The Banking Sector Provides Stability
Banks continued to perform well, buoyed by strong financial positions and investor confidence. The ASX 200 Banks Index climbed by 1.30% to 3,532.3, with major financial institutions enjoying moderate gains. The Financials sector overall saw a 0.91% rise by midday, further contributing to the market’s stability.
Overseas Markets Remain Subdued
Overseas markets showed little improvement after a turbulent session in the US. Wall Street continued to experience fallout from the sharp decline in Nvidia’s stock, which saw a 9.5% drop in value, wiping out US$267 billion in one day. The S&P 500 ended 0.16% lower, while the Nasdaq slipped 0.3%. The US jobs data disappointed, with the JOLTS report showing weaker-than-expected figures, leading to speculation that the Federal Reserve might lower interest rates sooner than anticipated.
In Asian markets, Japan’s Nikkei fell by 0.62%, while the Hang Seng in Hong Kong and Shanghai markets remained relatively flat, trading at -0.2% and +0.2% respectively.
ASX Small Cap Winners and Losers
Among small-cap stocks, several companies posted strong gains. Carbine Resources (ASX: CRB) rose by 33.3%, while Eden Investments Ltd (ASX: EDE) also climbed 33.3%. Energy Metals Ltd (ASX: EME) surged by 64.3% following the release of encouraging exploration results.
However, the small-cap space wasn’t without its losers. Coronado Global Resources (ASX: CRN) dropped by 17.12%, while Wildcat Resources Ltd (ASX: WC8) fell by 11.77%. Investors in these companies faced significant losses due to a mix of sector-specific challenges and broader market pressures.
Outlook for the Day
Investors are cautious but hopeful as the Australian market approaches the afternoon session. Despite the early gains in tech and real estate, the continued struggles of the Energy sector and falling iron ore prices could weigh on the overall performance. Markets will be closely watching developments in the US and China, particularly with regard to commodity demand and monetary policy shifts.
While the ASX 200 has posted modest gains, the volatility in global markets and weak local investor sentiment may limit the potential for a significant rally in the coming days. Investors will need to navigate these uncertainties carefully, with attention focused on economic data and corporate earnings updates.