ASX ends lower, following losses on Wall Street

The laggards

Utilities (down 2.2 per cent) lost ground, with AGL (down 4.8 per cent) the biggest large-cap decliner.

Gold miners Evolution Mining (down 2.4 per cent) and Northern Star (down 2.7 per cent) were also weaker, along with iron ore heavyweights BHP (down 1.1 per cent) and Fortescue (down 2 per cent).

Financials (down 1.8 per cent) declined, with all four big banks trading lower. CBA shed 2.3 per cent, NAB lost 1.6 per cent, Westpac dropped 2 per cent and ANZ declined 2.1 per cent.

The lowdown

WealthLander chief investment officer Jerome Lander said the sharemarket’s decline reflected weakness in the Australian economy and a pullback from its strong recent performance.

“There’s been a strong rally in the last few weeks, so I think the market is getting a bit tired,” Lander said. “There are some concerns around a few things coming out of the woodwork like weakness in purchasing managers index data. The market is due for a bit of a correction.”

The financials sector dropped on concern that weakness was coming back into the economy, Lander said, while utilities, which tend to have longer-dated debts, came off following a sell-off in longer dated treasuries amid concern that inflation might not yet be under control.

Meanwhile, sectors such as healthcare, which are less dependent on economic circumstances, performed better, and technology, which Lander said had “its own drivers and momentum from enthusiasm in AI” also remained more resilient.

The local losses came after Wall Street took a step back from its big rally so far this year, and most stocks there fell overnight following a mixed set of earnings reports from US companies.

The S&P 500 lost 0.3 per cent, coming off its fifth-straight winning month. The Nasdaq composite sank 0.4 per cent and the Dow Jones squeezed out a gain of 0.2 per cent.

After the market closed, ratings agency Fitch announced it has downgraded the US AAA credit rating one notch to AA+, citing an expected increase in government debt over the next three years and a “steady deterioration in standards of governance” over the past two decades.

Worries have been broadly rising that expectations have built too high for the entire US stock market after the S&P 500 surged more than 19 per cent this year.

Stocks had leapt to a 16-month high on hopes inflation is cooling enough to get the Federal Reserve to stop hiking interest rates. That in turn could allow the world’s largest economy to avoid a long-expected recession.

Most companies so far this reporting season have beaten forecasts, but that’s usually the case. And expectations were low coming into this season, with analysts calling for the worst decline in S&P 500 earnings per share in three years.

Construction company Caterpillar was among the winners on Wall Street on Tuesday. It rose 8.9 per cent after blowing past analysts’ forecasts for earnings during the spring. It was the stock pushing up the most on the Dow, where Caterpillar can have more of an impact than on the S&P 500 because of its big stock price.

Some profit reports scheduled for later in the week could have a greater impact on the market.

Amazon and Apple are scheduled to report on Thursday, and because they’re two of the biggest stocks by market value, they pack more punch on the S&P 500 than other companies. Both have also soared this year, along with other Big Tech stocks.

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With AP

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