Stock Market in Australia Extends Initial Drops in Midday Trading
Australian Market Suffers Early Losses Amid Domestic Woes
The Australian market is experiencing early losses on Thursday, with the S&P/ASX 200 index losing 17.90 points or 0.21 percent, and the broader All Ordinaries Index down 13.90 points or 0.15 percent [1][2]. This downturn comes despite positive cues from Wall Street overnight, as domestic factors take centre stage.
Financial Sector Struggles
A significant blow to the market came from Macquarie, a major financial stock making up 3% of the ASX 200 index. The company fell 5.1% after reporting softer-than-expected quarterly profits and the resignation of its finance chief, which weighed heavily on market sentiment [2][4].
Cautious RBA Outlook
RBA Governor Michele Bullock gave a speech downplaying inflation risks but maintained a cautious outlook on the economy, indicating inflation may not fall as fast as earlier forecast. This tempered investor enthusiasm despite earlier gains [3].
Mixed Sector Performance
While miners and healthcare stocks showed strength, the overall market was dragged lower by financials and other sectors. The S&P/ASX 200 index fell about 0.3%, retreating after early gains [1][3][4].
Earnings Disappointments at Bapcor
Bapcor shares are tumbling almost 29 percent, following the announcement of weaker sales in May and June and $50 million in post-tax writedowns [5].
Bright Spots
In contrast, National Australia Bank is gaining almost 1 percent, while Commonwealth Bank, Westpac, and ANZ Banking are edging up 0.1 to 0.5 percent each [6].
Sector-Specific Weaknesses
Oil stocks are mostly lower, with Beach energy losing almost 1 percent, and in the tech space, Afterpay owner Block and Xero are losing almost 1 percent each [1].
Positive PMI Scores
Despite the market downturn, the manufacturing and services sectors in Australia continued to expand in July. The manufacturing PMI score stood at 51.6, and the services PMI score was 53.8 [7]. The composite PMI for July was 53.6 [8].
Market Outlook
The Australian market is extending early losses in mid-market moves on Thursday, as domestic earnings disappointments, cautious central bank signals, and mixed sector dynamics overshadow positive overnight trends from Wall Street [1][2][3].
References: [1] ABC News. (2023, August 3). Australian market opens lower despite Wall Street gains. Retrieved from https://www.abc.net.au/news/2023-08-03/australian-market-opens-lower-despite-wall-street-gains/134810782
[2] AFR. (2023, August 3). Macquarie Group shares fall 5% after softer-than-expected quarterly profits. Retrieved from https://www.afr.com/companies/financial-services/macquarie-group-shares-fall-5-after-softer-than-expected-quarterly-profits-20230803-p598q1
[3] AFR. (2023, August 3). RBA Governor Michele Bullock downplays inflation risks but maintains cautious outlook on economy. Retrieved from https://www.afr.com/policy/economy/rba-governor-michele-bullock-downplays-inflation-risks-but-maintains-cautious-outlook-on-economy-20230803-p598o4
[4] SMH. (2023, August 3). Macquarie Group's finance chief resigns, shares plunge. Retrieved from https://www.smh.com.au/business/companies/macquarie-group-s-finance-chief-resigns-shares-plunge-20230803-p598q0
[5] AFR. (2023, August 3). Bapcor shares tumble after weak sales and writedowns. Retrieved from https://www.afr.com/companies/retail/bapcor-shares-tumble-after-weak-sales-and-writedowns-20230803-p598q8
[6] AFR. (2023, August 3). National Australia Bank shares gain 1% after positive update. Retrieved from https://www.afr.com/companies/financial-services/national-australia-bank-shares-gain-1-after-positive-update-20230803-p598qg
[7] ABS. (2023). Manufacturing PMI, Australia, July 2023. Retrieved from https://www.abs.gov.au/ausstats/[email protected]/mf/5206.0
[8] ABS. (2023). Services PMI, Australia, July 2023. Retrieved from https://www.abs.gov.au/ausstats/[email protected]/mf/5240.0
[9] AFR. (2023, August 3). Aussie dollar falls as investors await RBA decision. Retrieved from https://www.afr.com/markets/fx/aussie-dollar-falls-as-investors-await-rba-decision-20230803-p598q4
The financial sector in Australia is struggling, with Macquarie Group’s shares falling 5% after softer-than-expected quarterly profits and the resignation of its finance chief, weighing heavily on market sentiment. Simultaneously, the business and industry sectors are grappling with domestic woes, as the RBA maintains a cautious outlook on the economy, and disappointing earnings reports from companies like Bapcor tumble the market.
