The Australian share market (ASX 200) gave up its hard-won 8000-mark record on Friday, July 19th, dropping 0.8% in a synchronised fall following Wall Street’s lead. As the market closed, the ASX 200 index dropped 64.9 points to 7971.6, with the banking, mining, and technology sectors among the weaker industries. This decline took the weekly fall to a modest 0.1%, despite the ASX 200 hitting a fresh high of 8057.89 points on Wednesday, July 17th, 2024.
Figure 1: The ASX 200 touched 8057.89 points on Wednesday, July 17th, 2024
Figure 2: The Stock fell to 7,971.59 points on July 19th
Wall Street Influence and Market Sentiment
The local decline mirrored a drop on Wall Street, where the Dow, Nasdaq, and S&P 500 all saw decreases. Even Netflix, which posted a 44% rise in June quarter profits to US$2.15 billion and gained over 8 million new subscribers, traded flat in after-hours markets. Investors are now anticipating a greater chance of a second Trump presidency, which they interpret as inflationary due to potential policies such as tax cuts, severing investment ties with China, and increased government spending.
Commodity Prices and Economic Data
Australia’s market reaction was exacerbated by falling commodity prices. Iron ore, gold, and copper prices all dropped overnight, driven by weaker economic data from China. China’s GDP growth slowed to 4.7%, with home sales and property investment also showing weakness. As China’s steel industry enters a period of typically weaker demand, this has put additional downward pressure on the prices of major miners, significantly impacting the ASX.
Sector-Specific Declines
Materials were the weakest local sector, dropping 1.5% due to lower commodity prices. Gold miners, which had seen gains on Thursday, fell back with shares in Evolution Mining (ASX: EVN) down 2.2%, Northern Star Resources (ASX: NST) down 1.5%, and Newmont Corporation (ASX: NEM) down 2.8%. The big iron ore miners also took a hit, with BHP (ASX: BHP) down 2.1%, Fortescue Metals Group (ASX: FMG) down 1.9%, and Rio Tinto (ASX: RIO) off 1.7%.
Banking Sector Troubles
The banking sector also faced challenges in the Australian Share Market. Commonwealth Bank (ASX: CBA) fell 0.8%, ANZ (ASX: ANZ) lost 1.2%, and National Australia Bank (ASX: NAB) also dropped 1.2%. Westpac (ASX: WBC) received some good news as the banking regulator APRA agreed to halve the amount of capital Westpac must hold in reserve to $500 million due to improved risk management. Despite this, Westpac shares still fell 0.9% to $28.22.
Major Movements and Small Cap Performance
As per the Australian share market news, Lifestyle Communities (ASX: LIC) saw a significant drop of 13.9% to $9.51. This happened after controversy over the legality of exit fees charged to homeowners forced the company to scrap forward earnings and operational guidance. Block Inc. (ASX: SQ2), owner of Afterpay, also declined 4.3% to $102.23 in the Australian share market. This took place after the publication of the announcement of the closure of its Cash App peer-to-peer payments business in the UK.
Australia’s equities were lower at the close on Friday, as losses in the ASX All Ordinaries Gold, S&P/ASX 300 Metals & Mining, and S&P/ASX 200 Materials sectors led to lower shares. At the close in Sydney, the S&P/ASX 200 lost 0.81%.
Biggest Gainers and Losers
Despite the broader market downturn, there were some notable gainers in the Australian Share Market ASX. Mesoblast Ltd (ASX: MSB) rose 4.98% to trade at 1.16 at the close. NRW Holdings Ltd (ASX: NWH) added 3.46% to end at 3.29, marking a three-year high, and Nuix Ltd (ASX: NXL) was up 2.47% to 3.32 in late trade.
On the downside, Zip Co Ltd (ASX: ZIP) fell 5.18% to 1.69, Megaport Ltd (ASX: MP1) declined 5.00% to 11.01, and St Barbara Ltd (ASX: SBM) dropped 4.17% to 0.23. Falling stocks outnumbered advancing ones by 692 to 394, with 448 ending unchanged on the Sydney Stock Exchange.
Commodities and Currency Movements
The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was up 2.01% to 11.71. Gold futures for August delivery were down 1.46% to $2,420.60 a troy ounce. In other commodities trading, crude oil for September delivery fell 0.70% to $80.73 a barrel, while the September Brent oil contract dropped 0.49% to trade at $84.69 a barrel as per the Australian share market news.
Upcoming Economic Indicators
Looking ahead, detailed labour force figures due on Thursday will be a key focus for investors in the Australian Share Market (ASX). Analysts expect employment to rise by 20,000 in June but also anticipate the unemployment rate to increase to 4.1% due to economic pressures, high immigration, and a rising participation rate.
In the US, key indicators to watch include new and existing home sales, GDP figures, jobless claims, trade balance, and personal income and spending data. These will provide further insight into the economic landscape and potential market movements.
Conclusion
The recent performance of the Australian share market ASX highlights the interconnectedness of global markets, particularly with Wall Street, and the significant impact of economic data and commodity prices. As investors navigate these turbulent times, staying informed about both local and international developments will be crucial for making strategic decisions.
