Home / Daily Market Update / Powell comments send ASX lower, race to quality, commodities to the rescue

The S&P/ASX200 (ASX: XJO) overcame a weak start, falling as much as 0.8 per cent to finish 0.3 per cent lower for the day.

Whilst the sentiment has turned significantly negative, on the back of the falling oil price, Omicron variant and higher bond rates, the performance of individual stocks has been considerably more divergent.

The materials sector continued its recent resilience, gaining 0.6 per cent behind BHP (ASX: BHP) which added 1.3 per cent as steel and iron ore prices continue to surge.

On the other hand, the energy and utilities sectors were down 0.2 and 1.4 per cent, with Santos (ASX: STO) down 1 per cent as the oil price falls into true correction territory.

Rare earths miner Lynas (ASX: LYC) hit a record high after gaining 2.7 per cent despite any new releases, whilst South 32 (ASX: S32) also gained 4 per cent.

But all eyes were on the GDP data which showed the Australian economy shrunk by another 1.9 per cent in the September quarter as NSW and Victorian lockdowns were in full swing.

This was significantly better than ‘expert’ predictions, with economists expecting a 2.7 per cent contraction.

Business profits were the saviour, growing 4.2 per cent behind booming commodity prices whilst consumption fell close to 5 per cent as restaurant sales were down over 21 per cent in the period.

GUD down on open, Cooper in trading halt, Charter Hall acquires

Charter Hall has continued its acquisition spree, announcing the purchase of a 49 per cent stake in 20 Ampol (ASX: ALD) service stations for $50.5 million.

Management also confirmed guidance that earnings per share will be at the top end of guidance as a resilient property market boosts valuations and rental collections.

Sustainable superannuation and investor Australian Ethical (ASX: AEF) shares fell 4.5 per cent despite guiding to a $5 to $5.5 million profit for the first half of 2021, an 8 per cent improvement on 2020 levels.

They also confirmed a further 9 per cent jump in assets under management to $6.64 billion as investors seek out more responsible investment options.

Shares in GUD Holdings (ASX: GUD) fell by over 10 per cent after leaving their trading halt following the major private equity acquisition announced yesterday.

Cooper Energy (ASX: COE) responded to a recent article that suggested they may be considering the purchase of the underperforming Orbost Gas plant.

One of the more interesting takeaways from the GDP result was the massive jump in the household savings rate, from 11 to 19 per cent, as those in stable work battened down the hatches as lockdowns hit.

Markets fall on US omicron case, job gains continue, Powell settles fear, Salesforce tumbles

US markets remain in a kangaroo pattern, initially gaining on Wednesday before tanking as the session came to a close as the first case of Omicron was identified in California.

Jerome Powell’s second day of testimony sought to calm fears of the impact of tapering.

He continues to suggest that the cessation of bond buying will have limited impact on the market, noting interest rates will remain flat regardless and highly supportive.

The result was across the board losses with the Dow Jones down 1.3 per cent, the S&P500 1.2 per cent and a 1.8 per cent loss for the Nasdaq.

Payrolls were better than expected with 534,000 new jobs gained whilst the manufacturing measures are showing signs of a loosening in supply chain issues.

Shares in Salesforce.com (NYSE: CRM) fell more than 11 per cent after the company downgraded earnings guidance.

They now expect revenue of around US$26 billion and earnings of US$4.36 per share.

On the positive side, third quarter revenue is expected to jump by at least 25 per cent on 2020 levels as the move to digitalisation continues.