RBA’s oversized hike spooks ASX and closes down 0.4%

Australian banks have started to recoup their losses, but not enough to see the glow of green after the surprise 25bps rise to 0.35% versus the expected 15bps market participants were expecting from the RBA. The interest rate hike has made traders optimistic about the big bank’s outlook on their net interest margins, the income they earn from money lent.

At the closing bell, the S&P/ASX 200 was down 0.4% or 31 points at 7,316 with 127 out of 200 stocks in negative territory, while 66 rose.

Join me here for “RBA signals more rate hikes, surprises with 25 bps at 0.35%” and here for “Biden spending $4.2 billion on EV batteries pulls lithium miners higher.”

Macquarie Group (ASX: MQG) and Westpac (ASX: WBC) both added 0.1% to $203.43 and $23.90 respectively with Commonwealth Bank (ASX:ABC) and NAB (ASX:NAB) both losing 0.7% each while ANZ (ASX: ANZ) closed down 0.2% at $27.26.

Fortescue Metals Group weighed on the index (ASX: FMG) 4.8% drop to $20.61, leading losses in the iron ore mining circle, joined by a sharp decline in Costa Group Holdings (ASX: CGC)down 6.4% to $3.06.

Tech stocks cushioned the blow, taking a solid lead on Wall St with Xero (ASX:XRO) added 2% to $91.83, Appen (ASX: APN) jumped 4.6% to $6.65 while Altium (ASX: ALU) closed up 1.1% at $31.77. Meanwhile, Block (ASX:SQ2) jumped 4.6% to $148.47, while Zip Co (ASX:ZIP) added 5% to $1.15 and Splitit (ASX: SPT) jumped 10% to 27.5 cents.

It will be interesting to see what consumer sentiment looks like next week after the latest survey showed the index fell 5.8 points to 90.7, the lowest since Victoria’s second Covid wave in August. 2020 and the biggest weekly decline since early January at its peak. of the Omicron wave. Amid concerns about inflation and rate hikes, the proportion of respondents who are pessimistic about their financial outlook over the next year has risen to its highest level since April 2020. Moreover, only 10% of respondents s are now expecting a ‘boom period’ for the economy over the next 12 months. With today’s interest rate outcome, we could see those results plummet as consumers worry about what it now means for their back pocket that the interest rate has officially gone up.

Woolworth (ASX: WOW) added 0.4% to $38.44, bucking the broader market trend as investors shrugged off “a very tough quarter.” The supermarket giant’s quarterly update was mixed, with its Australian operations outperforming its New Zealand counterpart. Analysts said the Kiwi’s result was likely unique, while Big W’s performance was slightly better than expected.

Awesome Retail Group (ASX: SUL) The trade update to date also showed a mixed bag among its retail brands. UBS said its bottom line led to a 6% increase in the broker’s fiscal 2022 revenue forecast. Pressure on the supply chain had been a burden for many retailers, with several companies buying excess inventory and Super Retail was one that paid off, as some Rebel Sports stores were hit by “global supply chain disruptions.” Although the significant changes in efficiency and customer experience are offset by the impacts of covid-19, the changes bode well for the future. Despite the expected short-term increase, UBS maintained its buy rating and reduced its price target to $13.00 from $14.00 on the coin valuation sum. The shares fell 2% to $10.24.

Several companies have slipped after updating their guidelines at the Macquarie Australia conference.

Cleanaway (ASX:CWY) fell 3.2% to $3.05 after warning that delayed cost recovery and one-time operational disruptions are expected to reduce the company’s fiscal 2022 EBITDA by approximately $15-20 million

Inghams (ASX:ING) fell 4.3% to $2.87 after saying its recovery was hurt by the continued effects of the Omicron outbreak, natural disasters and rising feed costs.

At Bapcor (ASX: BAP) the share price fell 4.9% to $6.40, although its performance for fiscal 2022 through March 31 was also strong given the circumstances in the first half. The automotive aftermarket fundamentals remain strong and should continue to do so with the business, continuing to aim to generate pro forma earnings at least at the FY2021 level.

Breville Group (ASX: BRG) confirmed its guidance for this fiscal year, with EBIT “in line with market consensus guidance of approximately $156 million. The shares fell 1.8% to settle at $22.91.

Investors are now looking to Wall St for the Federal Reserve’s two-day meeting with economists expecting a 50bp hike to be unveiled, but a handful see a 75bp hike , as well as hikes in June and July to fight inflation. However, market participants’ concerns are whether the scale and scope of rising interest rates will send the US economy into a recession. Like the Australian dollar, the greenback could be higher if a super size rate is tackled on Thursday.

We will wait and see.

Futures contracts

Dow Jones futures are pointing up 73 points.
S&P 500 futures are pointing up 13 points.
Nasdaq futures are pointing up 48 points.
SPI futures are pointing to a 28-point drop the next time the market opens.

Best and Worst Performers

The best performing sector was information technology, up 0.9%. The worst performing sector was real estate investment trusts, down 1.4%.

The best performing stock in the S&P/ASX 200 was Magellan Financial Group (ASX:MFG), closing up 5% at $17.11. It was followed by shares of Zip Co (ASX:ZIP) and Appen (ASX:APX).

The worst performing stock in the S&P/ASX 200 was Costa Group Holdings (ASX: CGC), closing down 6.4% at $3.06. It was followed by shares of Premier Investments (ASX: PMV) and Imugene (ASX:IMU).

Asian markets

Japan’s Nikkei is closed due to Constitution Remembrance Day.
Hong Kong’s Hang Seng gained 0.14%.
The Shanghai Composite in China is closed due to Labor Day.

Commodities and the dollar

Gold is trading at US$1,860.42 per ounce.
Light crude is trading $0.10 lower at US$105.07 a barrel.
One Australian dollar buys 71.15 US cents.

About Matthew Berkey

Check Also

Chinese premier says economy on ‘uptrend’, pledges further support

BEIJING, Nov 13 (Reuters) – China’s economy has grown 3% over the past three quarters …