ASX lower as banks slide; South32 jumps on $8.1b deal

The Australian sharemarket has fallen at the open with banking giants weighing on the index, but mining stocks rebounding.

The S&P/ASX 200 was 36.9 points, or 0.4 per cent lower to 8741.8 in early trade, with seven of 11 industry sectors in negative territory. The ASX lost 0.5 per cent on Tuesday.

Mining stocks advanced in early trade on the back of stronger commodities’ prices after falling on Tuesday. BHP added 1.3 per cent while Rio Tinto and Fortescue each advanced 0.3 per cent. Gold miners slid lower as the price of the precious metal dipped below $US4000 an ounce, having given up almost 2 per cent in the last two sessions. Northern Star lost 0.8 per cent and Evolution Mining fell 0.7 per cent in early trade. South32 jumped 9 per cent after it agreed to sell aluminium assets to Alcoa in a deal worth up to $US5.6 billion ($8.1 billion).

Financial stocks lost ground after solid gains in the previous session with Commonwealth Bank falling 1.2 per cent, National Australia Bank dropping 1.5 per cent, Westpac losing 0.6 per cent and ANZ Bank shedding 1.4 per cent in early trade. Meanwhile, fund manager Magellan has completed a merger with the Sydney-based investment banking group Barrenjoey, it told the ASX on Wednesday. The combined group, to be chaired by David Gonski, will be known as Barrenjoey Group Limited.

Supermarket giant Coles slumped 4.3 per cent after the competition watchdog rebuffed its attempt to acquire a vacant site in regional Australia because it would “substantially” lessen supermarket competition in the area.

The Australian Competition and Consumer Commission said Coles would effectively push out an independent supermarket, and potentially its properties or assets, if Coles were to set up a full-sized supermarket and liquor store in Kalgoorlie-Boulder, Western Australia. Rival Woolworths lost 2.9 per cent in early trade.

Energy stocks advanced after oil prices edged higher in early Asian trade as traders monitored peace talks between the US and Iran and the return of shipping through the Strait of Hormuz. West Texas Intermediate traded at $US70.07 a barrel at 10.30am AEST while Brent, the international standard, was fetching $US73.42. Woodside Energy was 0.6 per cent lower in early trade as it took over operatorship of the 50-year-old Bass Strait oil and gas fields off the coast of Victoria from joint venture partner ExxonMobil. Oil and gas giant Santos lost 1.3 per cent in early trade while among the refiners, Ampol lost 1.6 per cent and Viva Energy fell 1.5 per cent.

Technology stocks are mixed with WiseTech adding 0.7 per cent, Technology One up 1.2 per cent and NEXTDC climbing 0.6 per cent but Xero lost 0.7 per cent.

The Australian dollar was trading at US69.07¢ at 10.40am AEST.

Overnight, the S&P 500 gained 0.8 per cent, though it still fell to its first losing month following two fabulous ones. The Dow Jones added 0.3 per cent to another record, and the Nasdaq composite climbed 1.5 per cent.

The main reason for this month’s weakness on Wall Street has been a fall to arth for stocks in the artificial-intelligence industry. After soaring to tremendous heights in the frenzy around AI, such stocks have come under pressure because of worries that they shot too high. That’s a big deal for all investors because AI stocks have grown into some of Wall Street’s largest and most influential, pulling indexes behind them.

AI stocks were stronger on Tuesday (US time), with Nvidia rising 2.6 per cent to trim its loss for the month. It was one of the strongest forces lifting the S&P 500.

Microsoft, which is investing heavily in AI, rose 1.2 per cent to bring its loss for the month back below 18 per cent. Oracle, though, fell 0.8 per cent to bring its drop for June to 35 per cent. It’s another company contending with concerns that big spending on AI may not yield enough productivity and profits to make it worth it.

Outside of AI, the economy seems to be rumbling along, even though US households are still feeling sour about it. A report released in the morning said that US employers were advertising many more job openings at the end of May than economists expected, the latest signal that the job market remains resilient.

But a second report said that confidence among US consumers improved by less than economists expected. More Americans are saying it’s hard to get a job, according to a survey by the Conference Board, even with data suggesting continued hiring.

Tuesday’s relatively quiet trading came as companies close their books for the quarter running from April through June. Investors want to see strong growth in profits to justify the big gains stocks made early in the quarter. Despite June’s drop, the S&P 500 is still on track for its best quarter in six years, when stocks rocketed out of the crash caused by the COVID pandemic.

The yield on the 10-year Treasury rose to 4.41 per cent from 4.38 per cent late on Monday.

In stock markets abroad, indexes rose across much of Europe.

With AP, Bloomberg

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