A man with white hair, and a black jumper, looking at the ASX stock market boards in Sydney.

ASX falls as job growth falters and recession fears flare up on Wall Street with UK inflation at 40-year high

Australian stocks fell further after the latest jobs data showed that job creation had slowed in September, even as the country’s unemployment rate has remained stable at a 50-year low.

The end of a two-day rally in Wall Street set the tone for the day’s trading.

Almost all industrial sectors in the benchmark ASX 200 index fell apart from energy stocks, which were boosted by strong quarterly manufacturing reports from major players.

Losers included industrials, real estate and technology companies, as well as mining and healthcare stocks.

Westpac, National Australia Bank and Commonwealth Bank closed higher while ANZ was flat.

Major indexes came off their lows, with the All Ordinaries down 1.2 percent to 6,919 and the ASX 200 index down 1 percent to 6,731.

The Australian dollar continued to weaken after the jobs data was released.

The local currency fell below 62.30 US cents during the day as investors bet the Reserve Bank would further slow the pace of rate hikes.

By 4:30 p.m. AEDT, it had recovered somewhat to about 62.61 US cents.

CBA currency strategist Joseph Capurso said he expects the Australian dollar to fall below $60 on a global recession, the stronger dollar and the slowdown in the Chinese economy.

Battery materials maker Novonix rose by up to a quarter after announcing it had been selected to start negotiations to receive $150 million ($239 million) in grants from the US Department of Energy for the to expand domestic production.

The worst performers in the index were the copper mine operator Sandfire Resources (-13.2 percent) and the data center operator Megaport (-11.8 percent).

Gold miner Evolution Mining (-8 percent) fell after saying gold production fell from July to September.

Buy Now, Pay Later Zip company (+1.6 percent) said revenue for the September quarter rose nearly a fifth to $163 million as transaction volume rose to $2.2 billion .

The number of active customers rose by 17 percent year-on-year to 7.4 million.

Energy Crisis Benefits

The global energy crisis caused by the war in Ukraine has been profitable for Australia’s major oil and gas companies.

Santos (+1.9 percent) said sales in the September quarter nearly doubled to a record high of $2.2 billion ($3.5 billion) on higher sales and a rise in LNG prices.

The company said its average realized LNG price rose by nearly two-thirds from July to September.

Production was boosted last year with the acquisition of Papua New Guinea-based Oil Search.

Meanwhile, Woodside Energy (+6.2 percent) posted record quarterly production of 51.2 million barrels of oil equivalent.

Record sales resulted in record revenue of $5.9 billion ($9.4 billion) for the quarter.

The production forecast for the year was also raised.

Woodside doubled its production after merging with BHP’s petroleum business.

Red numbers on Wall Street

US stocks fell after a two-day rally as Treasury prices soared and more warnings from corporate giants of economic storm clouds were on the horizon.

All three major equity indices ended lower and US Treasury rates rose again, with the benchmark 10-year Treasury yield hitting a 14-year high.

There were mixed earnings reports from major companies.

Abbott Laboratories reported weaker growth in international medical device sales due to the strong US dollar and supply difficulties in China.

There was also a drop in sales of COVID-19 test kits as testing fell due to a slower pace of infection.

Consumer goods maker Procter & Gamble and travel insurers posted better-than-expected quarterly earnings.

Electric vehicle company Tesla posted record third-quarter sales of $21.45 billion ($34.2 billion) and deliveries hit 343,000 in the September quarter, also a record thanks to a ramp-up in China.

Third-quarter profit doubled year-over-year to $3.3 billion ($5.3 billion) on higher vehicle sales.

Raw material price hikes and spending on new factories and battery production squeezed Tesla’s profit margins.

Netflix shares rose 13 percent after the company added 2.4 million global subscribers in the third quarter.

The Dow Jones Index fell 0.3 percent to 30,424, the S&P 500 fell 0.7 percent to 3,695 and the Nasdaq Composite fell 0.9 percent to 10,681.

David Keator of wealth management firm Keator Group said the US Federal Reserve’s steep rate hikes to curb inflation dampened investor appetite.

“We have seen a bear market upleg, but the market is still uncertain [to] when the Fed recognizes what it has done so far, it starts to work,” he said.

“The Fed is serious about its mandate to fight inflation, but there has been talk of tightening too much.”

In economic news, US housing starts fell 8.1 percent in September, compared to a nearly 14 percent increase in August.

The Federal Reserve said the US economy continued to expand, although it stagnated in some regions and contracted in some, and that price pressures remained elevated.

“The outlook turned more pessimistic amid growing concerns about weakening demand,” the Fed said in its Beige Book.

In the UK, inflation was back at a 40-year high as consumer prices rose at an annual rate of 10.1 percent, touching the 40-year high set in July.

The increase was fueled by higher prices for food, energy and transport.

Political turmoil continued, with Prime Minister Liz Truss rejecting calls to resign and another cabinet minister lost as Home Secretary Suella Braverman resigned after violating ministerial law.

This news weighed on European equities.

The FTSE 100 in London fell 0.2 percent to 6,925, the DAX in Germany also fell 0.2 percent to 12,741 and the CAC 40 in Paris fell 0.4 percent to 6,041.

raw materials

Oil prices rose after a fall in US crude inventories.

That’s after it fell to its lowest level in two weeks amid US President Joe Biden’s plans to sell 15 million barrels of oil from the country’s emergency reserves.

Mr. Biden wants to cut gas prices ahead of next month’s congressional election.

He said he will replenish reserves when oil prices fall to around $70 a barrel.

The move comes after major oil exporters OPEC+ agreed to cut production to push up prices.

Brent crude rose 2.3 percent to $92.15 a barrel.

Spot gold fell 1.4 percent to $1,628.99 an ounce on the stronger dollar and UK inflation news.


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