Stocks resumed their 2022 sell-off on Thursday, sending the S&P 500 to a new low for the year, as fears swirled that a recession won’t stop the Federal Reserve from raising interest rates.
The market was fairly quiet from a headline perspective. UK Prime Minister Truss defended her government’s unfunded tax cuts and stressed it was not time to reverse course despite market turmoil. On the economic front, German flash inflation came in hotter than expected for September.
Meanwhile, the Dow Jones Industrial Average plunged 1.54 per cent, . The S&P 500 declined 2.1 per cent to a new closing low for the year.The tech-heavy Nasdaq Composite fell 2.84 per cent.
The major averages are on pace for a month of sharp declines. The Nasdaq Composite is leading the monthly losses, down 9.1 per cent, with the Dow off 7.3 per cent and the S&P closer to 8 per cent.
Overnight the sell-off was broad-based and was led by Apple, which tumbled as a major investment bank downgraded the one-time bear market outperformer. The stock closed down 4.9 per cent.
In after hours trading, Nike shares are down 10 per cent – Like other retailers, Nike has been facing supply chain headwinds, such as a rise in both shipping costs and shipping times in recent quarters. The company also said its inventory levels swelled during the quarter compared to the year-ago period.
Across the sectors a rotation out of the utility sector played out across the market. Utility stocks, a historically defensive sector of the market, have done their job this year, producing a positive total return of 5 per cent as the S&P 500 index has fallen more than 20 per cent.
Utilities now look expensive based on their dividend yields relative to Treasuries and corporate bonds, as well as their price/earnings ratios versus the S&P 500 index. The average electric utility dividend yield is now 3.2 per cent, below the 3.7 per cent risk free rate on the 10-year Treasury note.
Within the materials sector, aluminium and copper stocks outperformed as Aluminium and nickel prices rose sharply on Thursday as traders fretted about supply shortages after the London Metal Exchange announced that it was considering banning new Russian metals from entering the market.
While the UK and Europe have imposed sanctions on Russian oil and coal, no equivalent measures have been taken for metals. Russia accounts for about 20 per cent of global nickel production outside China, and 13 per cent of aluminium production outside China.
In Europe, shares in Porsche rose 2 per cent in their trading debut overnight after the sports car maker priced its initial public offering at the top end of its expected range last night. The long-awaited offering was an increasingly rare bright spot for new IPOs.
One Australian dollar has fallen compared to the US dollar yesterday, buying 65.02 US cents (Thu: 65.27 US cents), 58.46 Pence Sterling, 93.92 Yen and 66.24 Euro cents.
In commodity news
Iron ore futures are pointing to a 0.3 per cent gain.
Gold shed $1.40 or 0.1 per cent to US$1669 an ounce.
Silver was down $0.17 or 0.9 per cent to US$18.71 an ounce.
Copper added $5.95 or 1.8 per cent to US$341.80 a pound.
Oil fell $0.92 or 1.1 per cent to US$81.23 a barrel.
The SPI futures are pointing to a 0.3 per cent fall.
Figures around the globe
Across the Atlantic, European markets closed lower. Paris fell 1.5 per cent, Frankfurt lost 1.7 per cent while London’s FTSE closed 1.8 per cent lower.
In Asian markets, Tokyo’s Nikkei added almost 1 per cent, Hong Kong’s Hang Seng fell 0.5 per cent and China’s Shanghai Composite closed 0.1 per cent lower.
Yesterday, the Australian sharemarket gained 1.4 per cent to close at 6555.
E&P Financial Group (ASX:EP1) is paying 2.7 cents fully franked
Global Value Fund (ASX:GVF) is paying 3.3 cents fully franked
Nick Scali (ASX:NCK) is paying 35 cents fully franked
Partners Group Global (ASX:PGG) is paying 1.0416 cents unfranked
Steamships Trading (ASX:SST) is paying 17.565 cents unfranked
Auswide Bank (ASX:ABA)
Argo Global Listed Infrastructure (ASX:ALI)
Beach Energy (ASX:BPT)
Best & Less Group Holdings (ASX:BST)
Ebos Group (ASX:EBO)
Emeco Holdings (ASX:EHL)
Evolution Mining (ASX:EVN)
Glennon Small Companies (ASX:GC1)
Grange Resources (ASX:GRR)
Hancock & Gore (ASX:HNG)
Iluka Resources (ASX:ILU)
Joyce Corporation (ASX:JYC)
Kelly Partners Group Holdings (ASX:KPG)
L1 Long Short Fund (ASX:LSF)
Mercury NZ (ASX:MCY)
Monadelphous Group (ASX:MND)
Origin Energy (ASX:ORG)
Prime Financial Group (ASX:PFG)
Plato Income Maximiser (ASX:PL8)
Pro Medicus (ASX:PME)
People Infrastructure (ASX:PPE)
Regis Healthcare (ASX:REG)
Shriro Holdings (ASX:SHM)
Silk Logistics Holdings (ASX:SLH)
Thorney Opportunities Ltd (ASX:TOP)
Treasury Wine Estates (ASX:TWE)
VGI Partners Asian Investments (ASX:VG8)
WCM Global Growth (ASX:WQG)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.