Home / Daily Market Update / Market falls on 50 basis point rate hike, confidence slips, every sector weaker

Market falls on 50 basis point rate hike, confidence slips, every sector weaker

Daily Market Update

The Australian sharemarket was on hold ahead of the RBA’s latest board meeting and interest rate decision. A somewhat unexpected 0.50 per cent increase in the cash rate to 0.85 per cent saw the S&P/ASX200 slump by 1.5 per cent.

The large move was predicted by only a few experts with the RBA highlighted the fact that inflation had increased significantly around the country, due to energy and materials prices, and therefore action needed to be taken.

This remains a challenging proposition for the RBA, seeking to normalise policy at a time when surging consumer prices on daily goods are already hitting demand and sentiment.

They clearly risk sending the economy into a recession in 2023 and beyond. This will have a direct hit on loan repayments, which has seen consumer sentiment fall to the lowest point since August 2020, down 4.1 per cent in June.

It was a similar story for business, where confidence also slumped 22 per cent to 100.2 points.

Zip Co (ASX: ZIP) was the biggest detractor, falling 14.4 per cent with just 20 or so companies managing to deliver a positive return.
GQG assets increase, Zip dumped, materials, energy outperform
Fund managers were among the top performers of the day, with Magellan (ASX: MFG) gaining 2.1 per cent and GQG (ASX: GQG) falling 1.2 per cent.

GQG reported a 4.6 per cent increase in assets under management in May, growing to US$90.4 billion, with international equities gaining US$2 billion and the major highlight following strong outperformance from the underlying funds.

Sandfire (ASX: SFR) topped the market, gaining 3.4 per cent as the copper price remains strong, whilst perceived lower quality and technology companies were among the weakest, falling 3 per cent.

Ingham’s (ASX: ING) remains a beneficiary of poultry shortages, gaining 3.2 per cent, with news that a shortage of lettuce had resulted in cabbage being used as a replacement by KFC outlets, another sign of a stressed supply chain and lack of labour. 

Real estate followed technology lower on a further jump in the bond yield, which has the potential to hit valuations, as Goodman Group fell 3.7 per cent.
Markets reverse, Target profit to slip, growth downgraded
The global markets staged a mid-session comeback on Tuesday, with all three benchmarks reversing losses to gain close to 1 per cent each.

They were led by the Nasdaq which finished 0.9 per cent higher on the back of a 1.7 per cent jump in Apple (NYSE: AAPL).

The stock gained after flagging a significant upgrade to their MacBook Air and Pro laptops.

But it was all about Target (NYSE: TGT) with the company downgrading earnings expectations and flagging falling margins as they seek to deal with an excess of product.

Management will now seek to cut prices to remove excess inventory, potentially challenging the inflation narrative. This is being seen as a shift from goods sold to services, and meant the consumer sector was the only one to finish lower.

The World Bank also downgraded global growth expectations for 2022 to just 2.9 per cent from the previous forecast of 4.1 per cent due to food shortages and the war in Ukraine.

Print Article

‘We go where the pain is’: value, after the bubble

A punishing, indiscriminate sell-off has left opportunities lying on the floor. After a 13-year “anti-value phase”, the style is coming back into style. It seems that value is back – not just in a sputtering short-term rally that will soon be dispatched by rejuvenated growth stocks, but in a new cycle that US-based Pzena Investment…

Lachlan Maddock | 1st Jul 2022 | More
Time for a reality check on 15 per cent super

As the new Labor Government explores pathways to 15 per cent, the superannuation industry needs to examine whether that’s really in the best interests of members. As of July 1, the superannuation guarantee will rise to 10.5 per cent on its long and meandering path to the legislated 12 per cent. That will give workers…

Lachlan Maddock | 1st Jul 2022 | More
‘Strong case’ to hit pause on choice performance test: Chant West

The performance test as it stands isn’t “fit for purpose” when it comes to choice products. And its bright line nature means tweaks are needed for MySuper products too. While the MySuper performance test dispatched a mere 13 funds, the outcomes for choice products could be even worse, according to analysis from ratings house Chant…

Lachlan Maddock | 1st Jul 2022 | More
News and OneVue go live with brightday
Investor Strategy News | 11th Jan 2015 | More
Perrignon off to HK with Credit Suisse
Investor Strategy News | 22nd Dec 2013 | More
Sports betting as a new asset class
Investor Strategy News | 3rd Jul 2016 | More
BlackRock ahead of consensus with bullish view
Investor Strategy News | 14th Jan 2017 | More
HSBC talks re-open old NAB wound
Lachlan Maddock | 9th Mar 2022 | More
Statewide seeds bespoke Apostle fund
Lachlan Maddock | 23rd Mar 2022 | More