ASX falls, Wall Street extends losing streak; Webjet dives

The Australian sharemarket has retreated at the open after Wall Street gave back more of its record-setting rally as mounting inflation concerns extended a sell-off in treasuries, sending yields to multi-year highs.

The S&P/ASX 200 was down 53.5 points, or 0.6 per cent, to 8551.20 in early trade, with seven of 11 industry sectors in negative territory.

Energy stocks climbed and oil prices held steady as traders weighed President Donald Trump’s newest threat to resume strikes on Iran, a pledge the US leader has made repeatedly before backing off since a truce started in early April. Brent, the international standard, closed above $US111 while West Texas Intermediate was fetching around $US104. Trump said that if Iran didn’t agree to US peace terms, “We may have to give them another big hit” — less than a day after he said he had just called off an attack.

Trump’s comments once again raised the prospect of a return to active hostilities with Iran, which has so far refused to bow to US demands to relinquish the remaining elements of its nuclear program after weeks of strikes that began in late February. But the president has repeatedly threatened — and then backed off from — renewed military action since a ceasefire was agreed on April 8, leaving traders reluctant to add to long positions without firmer evidence that fighting will resume. Woodside Energy added 0.6 per cent and Santos advanced 0.9 per cent. Among the refiners, Ampol added 1.4 per cent and Viva Energy was 0.7 per cent higher.

“The current environment highlights an increasingly important distinction between what traders are focusing on in the short term, and what investors continue to monitor over the long term,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.

Mining stocks retreated with the Iran war uncertainty continuing to cast a shadow over the global economic outlook. BHP and Rio Tinto each slumped 1.9 per cent while Fortescue lost 1 per cent. Gold miners also lost ground as the safe haven extended its losses from the prior session to be trading under $US4500 an ounce. Northern Star lost 2.3 per cent, Evolution Mining fell 3.1 per cent and Newmont slumped by 3.6 per cent.

Travel giant Webjet tumbled 14.3 per cent after it confirmed Virgin Australia has slashed the commissions it pays the online travel agent to cut out the middleman and send consumers directly to the airline site to maximise sales.

The move is compounding headwinds for Webjet, which warned investors on Wednesday that operating conditions will remain “fluid and challenging” amid the ongoing war in the Middle East, inflation pressures and low consumer sentiment. The company posted a 20 per cent earnings slump, is scrambling to keep up with technology and is battling upheaval in its management ranks. Virgin Australia shares lost 1.3 per cent.

Financial stocks retreated, with Commonwealth Bank down 0.7 per cent, National Australia Bank losing 1 per cent, Westpac retreating 1.1 per cent and ANZ Bank sliding 0.2 per cent.

Technology stocks advanced, with Technology One up 7 per cent, WiseTech up 1.5 per cent, Xero up 0.3 per cent and NEXTDC up 0.6 per cent. The sector is bracing for the latest results from chip company Nvidia, which will report its latest figures after Wall Street’s closing bell on Wednesday (Thursday AEST). How it does could determine whether technology stocks, and the larger US stock market, can maintain their rally.

The Australian dollar was trading at US71.01¢ at 10.28am AEST.

Overnight, the S&P 500 fell 0.7 per cent for its third straight loss since setting its latest all-time high on Thursday (US time). The Dow Jones dropped 0.6 per cent, and the Nasdaq composite sank 0.8 per cent.

Akamai Technologies dropped 6.3 per cent for one of Wall Street’s sharper losses after the cybersecurity and cloud computing company said it wants to raise $US2.6 billion ($3.7 billion) through a convertible note offering.

So far, many big US companies have been reporting stronger-than-expected profits for the latest quarter thanks in part to their customers continuing to spend in the face of high gasoline prices and other challenges.

In the bond market, Treasury yields climbed further. The yield on the 10-year Treasury rose to 4.65 per cent from 4.61 per cent late Monday and from less than 4 per cent before the war with Iran began. That’s a notable increase, and it’s part of a worldwide climb that’s making stock prices look even more expensive and threatening to slow the economy.

Higher yields can drive up rates for mortgages and loans going to companies to build AI data centres, which has been a big source of growth for the economy.

With AP, Bloomberg

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