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ASX falls as CSL shares plummet; BHP, banks advance
By Staff reporter
Welcome to your five-minute recap of the trading day.
The numbers
The S&P/ASX 200 closed down 63.1 points, or 0.7 per cent, to 8896.20, with six of its 11 industry sectors declining, led by healthcare, which was weighed down by heavy losses for CSL.
The Australian dollar ended the day buying US64.83¢, down from US65.13¢ on Monday’s close.
The local market took a hit today as investors sold off heavyweights such as CSL and Woodside.Credit: Louie Douvis
The laggards
Healthcare stocks led the stumble, dropping 8.3 per cent after biotech giant CSL’s share price plummeted more than 16 per cent on the announcement that up to 3000 jobs would be cut and its vaccine arm would be spun off as it streamlines its operations and deals with a volatile Trump administration. CSL is by far the biggest healthcare stock in Australia, still worth four times as much as its biggest peer, Pro Medicus, which finished unchanged.
The $130 billion biotech giant, which employs 29,000 people globally and about 3000 in Australia, plans to cut up to 15 per cent of its workforce to slash annual costs by as much as $550 million. The news came after the company clocked a 5 per cent rise in revenue to $15.6 billion, while net profit rose 15 per cent to $3 billion in the past financial year.
CSL faces significant geopolitical headwinds. The Trump administration is threatening tariffs on Australia’s pharmaceutical exports to the US, which affects CSL’s blood and plasma product business. Meanwhile, Robert F. Kennedy Jr, the US health secretary and noted vaccine sceptic, threatens the health of the company’s Seqirus vaccine business.
Shares in Woodside, the largest Australian oil and gas producer, slid 2.8 per cent on Thursday after revealing its half-year profit had fallen by a quarter to $US1.25 billion ($1.9 billion). Woodside chief executive Meg O’Neill also voiced frustration that the company was still waiting on the federal government to give the final green light to a multi-decade extension of its North West Shelf gas operations in Western Australia, and suggested the government was seeking to impose conditions that Woodside did not consider workable.
Santos fell 2.4 per cent after saying it didn’t expect to sign a binding takeover deal with a consortium led by the Abu Dhabi National Oil Company by the end of its exclusivity period later this month. The two parties will continue talks.
The lifters
BHP shares recovered from early losses to end the day 1.7 per cent higher. Australia’s biggest miner reported a 26 per cent fall in full-year profit and slashed its dividend to the lowest in eight years as prices for iron ore and coal tumbled on softer demand from China, but that payout was still better than analysts had expected.
BHP said it had earned an underlying profit of $US10.2 billion ($15.7 billion) in the year to June 30, its smallest profit in five years, with US President Donald Trump’s trade wars continuing to cast a cloud over the global economy. Rio Tinto and Fortescue both declined, each losing 0.4 per cent.
Financial stocks advanced. NAB rose 1 per cent, Commonwealth Bank and ANZ each rose 0.6 per cent and Westpac finished 0.5 per cent higher.
Employment website Seek surged 8 per cent after releasing its results, with revenue increasing by 1 per cent.
The lowdown
The local sharemarket slipped on Tuesday after a lull in overseas trading overnight. The session’s 0.7 per cent decline marked the steepest drop since August 1, when stocks fell 0.9 per cent, and came after four record-breaking sessions stretching into this week.
Global markets traded sideways overnight, with Wall Street investors in a summer lull as they search for a trigger to move share prices. The S&P 500 barely budged overnight, coming off its first loss after setting an all-time high in three consecutive days. The Dow Jones slipped 0.1 per cent, and the Nasdaq composite edged up by less than 0.1 per cent.
The coming symposium in Jackson Hole, Wyoming, where the Federal Reserve will bring together financial minds to discuss long-term US policy concerns, could offer that source of volatility, Capital.com market analyst Kyle Rodda said.
“Going into the event, the markets remain cautious,” he said.
Jackson Hole has been the home in past years of many big policy announcements from the US central bank. Federal Reserve Chair Jerome Powell will give a speech at this week’s meeting, and investors are hoping to hear how his mind has changed about interest rates since he said last month that he wanted to wait longer before making more cuts.
The fear at the time was that Trump’s tariffs could push inflation higher. Now, though, the bigger fear could be the slowing US job market following a disappointingly weak report on employment that arrived just after the Fed’s last meeting.
The bank’s twin jobs are to keep the job market healthy while also maintaining a lid on inflation, and helping one can often hurt the other in the short term. Lower rates can boost the economy by making it cheaper for US households and businesses to borrow to buy houses, cars or equipment, for example, but they also risk worsening inflation.
Inflation updates since the Fed’s last meeting have come in mixed, further muddying the picture, but traders are nevertheless strongly expecting the Fed to cut its main interest rate for the first time this year at its next meeting in September. The hope is that Powell could give a nod to that.
In other international markets, indexes mostly fell in Europe in their first trading after Trump’s inconclusive summit with Russian President Vladimir Putin on Saturday about the war in Ukraine. Trump met with Ukrainian President Volodymyr Zelensky on Monday.
With AAP, AP
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