Stocks down as China extends lockdown, property, tech selloff, Westpac reports

There are few signs that the global selloff is slowing down, with a weak US lead on Friday contributing to another 1.2 per cent fall on the S&P/ASX200.

The threat of higher interest rates and inflation are now been compounded by news that the Chinese government had extended lockdowns in key capital cities potentially adding further pressure to economic growth and supply chains.

The less cyclical businesses outperform, with staples and healthcare alongside energy, the only industries able to deliver a positive return; property and tech fell 4.1 and 3.2 per cent respectively.

CSL (ASX: CSL) and Woolworths (ASX: WOW) were highlights gaining 0.8 and 0.6 per cent on an otherwise rough day.

But the standout was Westpac (ASX: WBC) which gained 3.2 per cent after delivering a $3.1 billion first-half profit, a 71 per cent jump on the prior half.

The result was driven by a resilient business bank, where earnings increased 36 per cent, however, the consumer banking and mortgage division contracted by another 7 per cent.

This coincided with a fall in the net interest margin from 1.98 to 1.85 per cent due to the bank offering special rates in order to regain market share.

The bank continues to focus on cost-cutting, dropping 4,000 staff, and delivered a 61 cent dividend, still well below the 94 paid in 2019.
 
TPG sells infrastructure, Magellan out of tacos, lithium stocks retreat
 
TPG Telecom (ASX: TPG) was another standout, with the group gaining 2.3 per cent after announcing the sale of its extensive mobile and tower infrastructure business.

The group will receive $950 million from Canadian pension fund OMERS for 428 telecom towers and 809 rooftop installations that represent 21 per cent of the group’s network. 

Shares in Magellan (ASX: MFG) were hit by global weakness in fund managers, with the company falling 8.4 per cent after announcing the sale of their ‘non-core’ investment in taco fast food chain Guzman y Gomez.

Their 11 per cent share in the group was sold for $140 million, a 36 per cent return in less than 18 months, with capital likely to be paid back to shareholders.

The asset was purchased by Barrenjoey, the investment bank which Magellan also owns, and will be offered to clients of the firm.

Uncertainty in the outlook and pricing of battery materials continues to grow after comments from BHP in the prior week.

Lithium miners were among the biggest detractors on Monday with Liontown (ASX: LTR) and Pilbara (ASX: PLS) falling 8.7 and 6.2 per cent. 
 
S&P500 falls below 4,000, selloff continues as yields reach 3.2 per cent, Palantir at all-time low
 
The S&P500 has fallen to its lowest point since April 2021, reaching 4,000 points as the market fell another 3.2 per cent overnight.

The combination of Chinese weakness, higher bond yields and growing uncertainty around growth has continued to push the market lower.

The Dow Jones comparatively outperformed, falling 2 per cent, with the Nasdaq suffering another 4.3 per cent selloff.

Palantir (NYSE: PLTR), one of the companies that reflected in the dominance of technology post the pandemic fell another 21 per cent after reporting weaker than expected numbers.

This sent shares down 60 per cent for the year as the company posted revenue of just US$446 million following a slowdown in government work for their data analytic software.

Bitcoin has offered little in the form of a hedge, with the cryptocurrency down 10 per cent alongside the Nasdaq, moving below US$35,000 and taking the drop from the 2021 high to more than 50 per cent.

Nearly every risk asset is being sold off in this environment, but it remains as important as ever to hold the course and rely on diversification amid what is ultimately a market still seeking direction.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.