— Finance

Rollercoaster session for ASX, fails to hold onto post-Reserve Bank of Australia meeting rally

The ASX surged after the RBA flagged, keeping the cash rate at its historic low for another two years but couldn’t hold onto the gains.

Despite positive overseas leads, the Australian share market slumped lower after failing to hold onto its post-Reserve Bank of Australia meeting rally.

The benchmark S&P/ASX200 index closed 0.63 percent lower at 7324.3, while the All Ordinaries Index eased 0.59 percent to 7646.6.

Ord Minnett said US stocks rose overnight in generally lackluster trade. Investors looked ahead to the Federal Reserve’s monetary policy meeting on Wednesday, while European stocks hit record highs as expectations of interest rate hikes supported bank stocks.

CommSec analyst Steven Daghlian said the local bourse started out in the green but faded as investors traded tentatively awaiting the outcome of our own central bank’s monthly board meeting.

OMG chief executive Ivan Tchourilov said it had been a rollercoaster, with the ASX gaining ground after the RBA determined to keep the cash rate on hold, as expected while noting higher than expected inflation.

“The Reserve did well to remain ambiguous on expectations, although we’re still looking at a 2023 interest rate hike instead of the previous 2024 forecast,” Mr. Tchourilov said. “Commodity prices were mixed, as was our resources sector.”

After iron ore prices slumped, Rio Tinto lost 2.54 percent to $88.66, BHP dropped 2.34 percent to $35.56, Fortescue shed 2.65 percent to $13.95, and Champion Iron sank 7.22 percent to $4.24.

Nickel miner IGO plunged 8.42 percent to $8.92, while Whitehaven Coal plummeted 9.54 percent to $2.37.

Origin Energy slid 1.95 percent to $5.02. At the same time, Beach Energy dropped 3.93 percent to $1.34 after announcing its managing director and chief executive Matt Kay had handed in his resignation to pursue other opportunities. But battery minerals company Magnis Energy Technologies was a stellar performer, rocketing 18.48 percent to 54.5 cents.

“Magnis released their annual report after market close yesterday, and the market is starting to see some value in Magnis’ proposition,” Mr. Tchourilov said.

“Despite operating at a loss without a finished product, they have $665m in binding offtake sales lined up for 2022. “The patented battery technology is gaining traction in the US market, where a new battery plant is being built in New York to meet demand.

“Magnis has already returned 280 percent at share price this year but will be one to watch especially closely into 2022 when battery production begins to ramp up.”

Insurance providers retreated after Insurance Australia Group downgraded its full-year guidance, upping its assumptions for hail and severe storm impacts in South Australia and Victoria last month to $1.045bn, from $765m previously.

“Cost allowances for natural perils have been lifted significantly after the first quarter came in more expensive than expected,” Mr. Tchourilov said.

“Margin guidance for the period has slipped a full 3 percent, and they’re allowing room for extreme weather events to continue into next year.

“IAG is maintaining strong underlying performance as reported in its end-of-year results. However, if the first quarter is anything to go by, it will be an expensive year for insurance providers.”

IAG shares tumbled 7.03 percent to $4.50, Suncorp gave up 4.15 percent to $11.31, and QBE softened 2.39 percent to $11.83.

Financial technology platform provider Premium Ltd leaped 14.46 percent to $1.42 after knocking back Netwealth Group’s $785m takeover offer, saying the bid did not appropriately value its current performance and near-term trajectory.

Gemma Broadhurst
Gemma Broadhurst is a 23-year-old computing student who enjoys extreme ironing, hockey and duck herding. She is kind and entertaining, but can also be very standoffish and a bit evil.She is an Australian Christian. She is currently at college. studying computing. She is allergic to milk. She has a severe phobia of chickens

Leave a Reply