Evening Wrap: ASX 200 falls, iron ore nosedives close to 2019 levels, US futures slump

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Markets

• The ASX 200 didn't stand a chance again freefalling iron ore prices which sent all large cap iron ore names down at least -4%

• Defensive sectors like Utilities and Real Estate tried to pick up the slack but not enough to offset the heavy declines from the miners

• Tech and Discretionary sectors also led to the downside following disappointing earnings from Amazon and Facebook-parent Meta

• 56% of the top 200 declined

Economy

• Australia producer price index rose 1.9% quarter-on-quarter in the September quarter

  • That’s a lot of quarters

  • The main contributors to growth in prices were: Output of building construction (+2.8%), heavy and civil engineering construction (+2.6%) and electricity, gas and water (+9.8%) 

• Japan kept interest rates unchanged at -0.1%

  • The Bank of Japan retained its dovish stance, saying short-and-long term interest rates will remain at current levels

Commodities 

Not too many exciting commodity price movements during Friday's session.

• Iron ore futures on the Dalian Commodity Exchange fell -4.1%

• Singapore iron ore futures fell -14.4% to US$79.55 a tonne

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Post market brief

What a brutal selloff for iron ore miners. The Morning Wrap flagged this weakness given the overnight fall in iron ore futures and declines for US-listed BHP and Rio, but the selling only intensified as the day went on.

Singapore iron ore futures continued to spiral lower from US$81.55 a tonne in the morning to US$79.6 at the time of writing - the lowest level since April 2020.

If it falls just a little more, it'll be the lowest since February 2019.

This weakness spread to other sub-sectors including copper, lithium and uranium.

Singapore iron ore futures (Source: TradingView)

The abysmal Amazon earnings also weighed on growth-heavy sectors like Tech and Discretionary.

Still, the rest of the market seemed ok. In the past few Wraps, we've talked about the outperformance of the Dow Jones - which is less tech heavy and weighted towards more defensive and blue chip stocks.

We're somewhat seeing that rotation and/or outperformance in 'safe haven' stocks as well, given the strength behind sectors like Utilities, Real Estate, Staples and Financials.

Index charts

S&P/ASX 200: Welcome to the bear market - where things break out for one day and then whipsaw back below the next. The ASX 200 is back into the recent trading range, still above the 50-day moving average, let's see how we hold up next week.

XJO chart (Source: TradingView)

S&P/ASX 200 Info Tech: Tightening with higher highs but also higher lows. Struggling to move above the 50-day. Do we see a big move soon?

XIJ chart (Source: TradingView)

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Major announcements

Large caps (>$1bn)

• Vicinity Centres (ASX: VCX) +4.3% reaffirmed its FY23 guidance, noting a slight increase in occupancy to 98.4% in the September quarter  

• Mirvac Group (ASX: MGR) +2.3% appointed Campbell Hanan as the company’s next CEO. Mr Hanan was formerly the Head of Mirvac’s investment portfolio 

• Carsales (ASX: CAR) +0.5% said it expects to achieve “good growth in adjusted revenue and adjusted EBITDA in FY23” at its AGM

• Janus Henderson (ASX: JHG) +0.2% posted an 8% decrease in assets under management to US$274.6bn in the September quarter 

• Downer (ASX: DOW) +0.2% was awarded an estimated $490m road maintenance contract by the Department of Transport

• Judo Capital (ASX: JDO) +0.0% reaffirmed its FY23 guidance of at least $9bn in gross loans and advances and 3% underlying net interest margins 

• Macquarie (ASX: MQG) -0.02% posted 1H23 net profits of $2.3bn, up 12% on 1H22 and down -13% on 2H22

• Kelsian (ASX: KLS) -2.6% plans to acquire Horizons West Bus and Coachlines for $23.4m  to diversify into WA transport serves 

• ARB (ASX: ARB) -3.6% said sales have ‘started well’ in 2Q23. Australian aftermarket order books ‘remains strong,’ export order book ‘is holding at recent levels’ but sales to OEMs are forecast to decline in FY23

• ResMed (ASX: RMD) -5.0% posted 5% revenue growth to $950.3m while gross margins rose 90 bps to 56.9%  

• West African Resources (ASX: WAF) -5.5% reaffirmed its 2022 production guidance of 220-240,000 oz gold at an AISC of less than US$1,100/oz 

• Silver Lake (ASX: SLR) -8.2% maintained its FY23 guidance of 260-290,000 ounces of gold at $1,850 to $2,050 an ounce 

Mid-to-small caps

• PeopleIN (ASX: PPE) +4.1% reaffirmed its FY23 guidance and said “operating conditions continue to be highly positive, given the strength of the employment market.”  

• GWA Group (ASX: GWA) +2.5% notes no material change to end markets since FY22. 1Q23 revenue was up 8% with an average 5% price increase across ANZ

• Pacific Current Group (ASX: PAC) +0.6% highlighted a 1.1% growth in funds under management to $171.2bn in the September quarter   

• Calix (ASX: CXL) -19% has been advised that the Australian Government’s $11m in grant funding is now cancelled 

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