ASX remains lower after jobs data; Judo Bank tumbles

The Australian sharemarket remains in the red after the release of the latest unemployment data showed the nation’s jobless figure dropped in May but not as far as many experts had expected, in a sign the job market is softening.

The S&P/ASX 200 was down 38.5 points or 0.4 per cent to 8769.9 in early afternoon trade. The Australian Bureau of Statistics reported this morning that the unemployment rate has eased from 4.5 per cent to 4.4 per cent.

Mining stocks are weaker with BHP down 1.8 per cent, Rio Tinto falling 2.5 per cent and Fortescue sliding 0.9 per cent. The price of gold continued to weaken overnight, hurting local stocks, with Northern Star shedding 3.9 per cent and Evolution Mining 4.8 per cent lower.

Financial stocks are mixed, with National Australia Bank the biggest mover of the big four with a 2.7 per cent drop. Commonwealth Bank edged up 0.1 per cent, Westpac lost 0.3 per cent and ANZ Bank weakened by 0.7 per cent. Judo Bank shares plunged 38.9 per cent after the business-focused lender warned of rising impaired loans. Judo reported three exposures to customers across three different sectors, and said as a result its “cost of risk” would be between $116 million and $122 million.

Energy stocks lost ground with oil prices continuing to slip as the US and Iran negotiate a possible end to their war. Brent crude, the international standard, fell overnight and lost another 1.7 per cent in Asian trade to be at $US72.47 a barrel. It has been trading below $US80 in recent days but is still above the roughly $US70 per barrel it was trading at in late February before the war began. US crude prices are 1.6 per cent weaker to $US69.25 a barrel. Woodside Energy declined 3.1 per cent and Santos lost 2.5 per cent, while Yancoal fell 3.9 per cent and Whitehaven Coal slumped 3.5 per cent. Among the refiners, Ampol added 1.2 per cent while Viva Energy climbed 2 per cent.

Local technology stocks are mixed, with Xero losing 3.5 per cent, NEXT DC falling 0.6 per cent while WiseTech was 4 per cent lower to continue a volatile week for the stock. Technology One was 3 per cent higher.

The Australian dollar was trading at US68.97¢.

Overnight, technology stocks weighed on Wall Street again, but semiconductor company Micron’s forecast of $US50 billion ($73.2 billion) in fourth-quarter revenue after the closing bell was sharply higher than analysts’ expectations of around $US43 billion. The upbeat outlook boosted US futures ahead of Thursday trade in New York as confidence in the artificial-intelligence trade was reignited.

Before Micron’s results, declines for several influential tech heavyweights, including Microsoft, pulled Wall Street lower even though most stocks in the S&P 500 gained ground.

The S&P 500 fell 0.1 per cent. The Dow Jones, which is less weighted with tech stocks, rose 0.4 per cent. The Nasdaq composite fell 0.4 per cent.

A 2.3 per cent drop in Microsoft was the heaviest weight on Wall Street. Oracle slumped 4.6 per cent.

Google’s parent company Alphabet slipped 0.2 per cent. The company is replacing Verizon in the Dow on Monday. The company’s inclusion in the S&P 500 means more to investors, however, because 401(k) accounts are much more likely to include an S&P 500 index fund than anything tied to the Dow.

Alphabet will become the fifth Magnificent 7 company to join the Dow. The others are Apple, Amazon, Microsoft and Nvidia.

Some of the bigger winners on Wall Street included homebuilders following approval of legislation beneficial to the industry. KB Home surged 16.7 per cent and D.R. Horton jumped 6.7 per cent.

The Federal Reserve is worried about stubborn inflation, which had been rising throughout the year as tariffs raised the costs for a wide range of goods. A shock to energy prices because of the US war with Iran worsened inflation. Petrol prices surged and shipping costs rose. The impact is expected to linger even as oil and gasoline prices fall.

The central bank will get an update on inflation on Thursday, when its preferred measure for prices is released. Economists expect the Personal Consumption Expenditures price index, or PCE, to show that prices rose 4.1 per cent in May. That would be the highest level in three years.

“Thursday’s PCE is set to take on greater importance for markets, especially since Federal Reserve Chair (Kevin) Warsh was emphatic in last week’s meeting about the central bank’s desire to achieve price stability,” wrote Rick Gardner, chief investment officer at RGA Investments, in a research note.