Evening Wrap: ASX 200 tumbles, iron ore miners finish green, US futures fall

The S&P/ASX 200 closed 95 points lower, down -1.4%.

The local sharemarket tumbled with every sector closing in negative territory, John Lyng's CEO offloads 4 million shares or 7.5% of the company and iron ore futures rally after China returns from its week-long national holiday.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

The ASX 200 got smashed just like Wall Street did on Friday night. Markets are now pulling back swiftly as following a better-than-expected US jobs report in the US.

• All 11 sectors were red

• Staples, Materials and Energy outperformed on a relative basis

• Iron ore majors BHP, Rio Tinto and Fortescue managed to close green after iron ore prices rallied more than 2%

• A mix of growth and defensive led to the downside including Utilities, Tech and Healthcare

• 86% of the Top 200 declined

Announcements

• Pushpay (ASX: PPH) +4.9% could see another takeover offer from BGH Capital, according to the AFR. Pushpay shares were halted shortly after open 

• Gold Road Resources (ASX: GOR) -5.8% produced 83,635 ounces of gold in the September quarter, in-line with expectations 

• John Lyng (ASX: JLG) -14.8% shares tumbled after CEO Scott Didier sold 4 million shares in the company, worth around 7.5% of the company 

• Dubber (ASX: DUB) -25.2% shares resume trading after a week-long suspension. The company’s audited annual report restated revenue from $35.7m to $25.3m  

• Aurelia Metals (ASX: AMI) -32.6% completed a feasibility study for its Federation underground mine. The company responded to market speculation of a potential capital raising, saying its considering a range of funding options     

Broker updates 

• Fortescue (ASX: FMG) Morgans downgrade to Reduce from Hold. Target $15.00

• Macquarie (ASX: MQG) UBS upgrade to Buy from Neutral. Target $185

• Regis Resources (ASX: RRL) UBS initiates coverage with Neutral. Target $1.80

• Westpac (ASX: WBC) UBS upgrade to Buy from Neutral. Target $27

• Jervois Global (ASX: JRV) Macquarie rates as Outperform. Target 70 cents

Economy

Nothing interesting on the economic front. Plenty of Fed speeches and US inflation data in the next few days will make up for the tumbleweed today.

Commodities 

• Iron ore futures +2.1% to US$97.6 a tonne

  • China is back online after a week-long public holiday

  • Chinese iron ore futures rallied 2.7% to a 2-month high

• Brent crude oil -1.3% to US$97 a tonne

  • Oil was on a 5-day winning streak, up 15.3%

• Gold -0.4% to US$1,687/oz

  • Gold is on a 4-day losing streak, down -2.2% from US$1,725

Latest news

Post market brief

Welcome back to another day in bear market territory.

For the past week or so, the Evening Wrap has talked about how the pullback is just as important as the rally and will show us whether or not the rebound was genuine or not.

The problem with current circumstances is that the market wants bad economic news to expedite the Fed's rate hike cycle to what'll eventually be more accommodative. The US jobs report last Friday showed an unexpected fall in unemployment and slightly better-than-expected nonfarm payrolls, which signals more can be done to bring price inflation back to the Fed's target of 2%.

"With no direct evidence as yet that underlying price inflation has appreciably stepped down from the high levels reached earlier this year, Federal Reserve plans to tighten further should not change based on today's report," said the Peterson Institute for International Economics.

The triggered the usual suspects: Yields jumped, US dollar went higher and equities fell sharply. The ASX 200 followed suit, with a big and broad selloff day.

The market needs to bounce otherwise the risk of revisiting June lows becomes an increasingly likely reality. The US CPI print is due on Thursday night, which could set off more fireworks for equity markets.

XJO chart (Source: TradingView, Annotations by Market Index)

Index charts

S&P/ASX 200 Energy: First red day after a 9-day winning streak. Can the Index set a higher low and push on?

XEJ chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Tech: Risk sectors are leading to the downside. Local tech stocks are in relatively better shape than the Nasdaq or a risk barometer like the Arkk ETF.

XIJ chart (Source: TradingView, Annotations by Market Index)

Arkk ETF (Source: TradingView, Annotations by Market Index)

Scans