25 July Markets at a glance

Around the grounds

It’s a sea of red for the Australian equity market as local investors follow their US counterparts hitting the sell button on technology stocks following disappointing earnings from mega caps Tesla and Google. Tesla (TSLA) shares were slammed in after hours trade overnight, down over 12% in the extended session after reporting a 45% drop in profit for the spring.

Google parent company Alphabet (GOOGL) was also under pressure, shares lost 5% in after hours despite beating on both top and bottom lines in the latest quarter. Analysts however have flagged some pockets of weakness, including slower growth in advertising revenue for YouTube than was expected.

The S&P/ASX200 is down around 1% with all sectors bar energy trading in the red. Tech has slumped to a five-week low while miners have taken a hit on continued weakness in the price of iron ore.

It’s a similar story for financials, the broader index is down over 1% with Macquarie Group sliding after a lacklustre first-quarter report. Energy the only bright spot, up marginally as the price of oil recovers.

In the news

The miners remain in focus with Fortescue (FMG) in the limelight, forecasting higher iron ore shipments for fiscal 2025 after it posted a 24% surge in shipments in the fourth quarter. Production in the quarter was also higher thanks to the implementation of a recovery plan in response to the railcar derailment and weather disruptions in the previous quarter.

Shares though have sunk despite the record quarter, trading down at one stage over 5%.

Australian listed shares of Ampol (ALD) have slumped to touch a nine-month low as the fuel retailer tips half year EBITDA to be weaker than forecast, to come in between AU$500 mill and AU$510 million. The stock is down around 7% YTD, as of last close.

And shares in employment marketplace Seek (SEK) are also in the red on news the company has written down the value of its Chinese marketplace Zhaopin by AU$141 million, in part attributed to a weaker-than-expected Chinese economy.

Finally, some positive news on Flight Centre (FLT) as JP Morgan ups its FY25 earnings estimates for the company by 3%, noting the second half is seasonally stronger than the first. The upgrade comes despite Flight Centre tightening its underlying profit before tax guidance earlier in the week.

Shares are up 7.7% this year, as of last close.

Going global

On the global stage, it’s red on screen. Tokyo’s Nikkei 225 has tumbled to an over five-week low, losing more than 1,000 points as the yen strengthens, South Korea’s KOSPI has dropped nearly2%, and the Hang Seng dipped over 1%.

Driving the dip? No surprise, the regions tech plays. Shares of Samsung Electronics and Nintendo are down around 2% while Tokyo Electron has tumbled nearly 5% in the Asian session.

To currency markets, back to the yen – as it draws support from unwinding carry trades ahead of ne week’s key Bank of Japan policy meeting, where a rate hike is firmly on the cards. The currency is up around half a per cent to touch its strongest level in 2 and a half months against the euro, while sterling has fallen to a one-month low.

More broadly, the big dollar is a touch firmer on safe-haven support from risk aversion after Wall Street ended the overnight session sharply lower as the rotation out of technology stocks continues and earnings from Tesla and Alphabet disappoint.  

The next catalyst, second quarter GDP figures in the US released tonight, though the outcome is unlikely to alter bets for a rate cut from the FOMC this year, with a September move already full price in, according to the CME FedWatch Tool.

Bringing it all back home, the Australian dollar continues under pressure, sliding to its weakest level since early May as falling commodity prices continue to dog the currency.

All prices and analysis at 25 July 2024.  The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.