Evening Wrap: ASX 200 falls, iron ore miners fade gains, US futures flat

The S&P/ASX 200 closed 50 points lower, down -0.7%.

The local sharemarket finishes the week down -0.9%, iron ore miners were dumped in the last hour of trade, technology stocks led to the downside, Australian Purchasing Managers Index continues to deteriorate and why there's still hope for a Santa rally.

Let's dive in.

Markets

The ASX 200 didn't stand a chance after digesting ultra-hawkish comments from the European Central Bank and depressing economic data from the US and China. The market took a -1.2% dive in early trade, bounced to around -0.4% by noon and drifted lower through to close.

• Several defensive sectors managed to close higher or around breakeven, notably Industrials, Staples and Real Estate

• Materials faded from positive territory, with names like BHP closing -0.6% lower from session highs of 1.4%. Most of the reversal happened in the last hour of trade

• Technology led to the downside amid a risk-off tone. Notable losers include Xero (-2.8%), Altium (-3.3%) and Block (-6.3%)

• 124 of the top 200 declined (62%)

Economy

Australia's manufacturing PMI held just above contraction levels at 50.4 in December, from 51.3 in November.

• "Weaker demand for Australian goods and services underpinned the decline in activity." - S&P Global Platts

• "Also as a result of the fall in new orders, employment expanded at a slower rate while business optimism stayed muted." - S&P Global Platts

• "Input cost inflation eased but selling prices continued to rise rapidly." - S&P Global Platts

Australia's services PMI fell to 46.9 in December from 47.6 in November.

• "The Flash PMI readings for December are still well above levels that would normally be associated with recession. What we are seeing could be the first signs of a desired soft landing for the Australian economy in 2023." - Chief Economic Advisor at Judo Bank Warren Hogan

• "Unfortunately, there are few signs of an easing of inflation with cost pressures across the supply chain still elevated in December." - Warren Hogan

Commodities 

“Weak economic data and a stronger USD weighed on sentiment across commodity markets. Easing supply constraints in energy were also headwinds,” said ANZ senior commodity analyst, Daniel Hynes. 

• Iron ore futures fell -3.5% to US$107.50 a tonne

• Brent crude fell -0.7% to US$80.9 a barrel

Latest news

Post market brief

This section will be a little more freestyle this fine Friday afternoon.

The ASX 200 defended session lows and bounced off the ~7,130 level. Its a volatile and choppy market that's also subject to subdued Christmas volumes.

Of interest, you can see the ASX's daily and monthly trading volumes here. If you go to the bottom for monthly, you can see quite the fall from September onwards.

XJO chart (Source: TradingView)

There's a lot of talk about a Santa rally, but the first half of December tends to be a bit of a lull period. While things tend to crank up in the second half (at least for the S&P 500, according to SentimenTrader).

Source: SentimenTrader

Major announcements

Larger caps (>$1bn)

• Aurizon (AZJ) +4.0%: Signed a binding sale agreement for its East Coast Rail business for $425m 

• Vulcan Energy (VUL) +3.8%: Received approval from German state authorities for the operating plan for Vulcan’s Lithium Extraction Demo Plant   

• Polynovo (PNV) +2.5%: Successfully completed a share purchase plan, raising $35.3m at $1.90 per share 

• Dexus (DXS) +1.9%: Notes 177 of its 183 assets have been externally revalued, resulting in a total estimated decrease of 322m or 1.9%

• Core Lithium (CXO) +0.5%: Announced ‘encouraging assay results’ from the drilling of two prospects close to the existing Finniss operations 

Mid-to-small caps

• Norwest Energy (NWE) +31.1%: Received an off-market takeover bid from Mineral Resources, offering 1 MinRes share for every 1,367 Norwest shares 

• Red 5 (RED) +2.8%: Declared commercial production at its King of the Hills Gold Project and expects 90-105koz for 2H23 

Broker updates 

Scans