The Australian sharemarket started strong after the weekend’s federal election provided a clear result, but new worries have wiped out early gains.
The first ASX session under an Anthony Albanese government started strongly enough, but investors appear to have lost their appetite amid a worrying set of global influences.
The benchmark ASX 200 rose by as much as 50.4 points – or 0.7 per cent – on Monday morning to hit a high of 7196.0 after the weekend’s federal election provided a clear result in favour of Labor.
But the local market soon handed back its gains and was last 0.1 per cent lower at 7139.5 with the major banks offsetting gains for materials companies such as BHP, Rio Tinto, and Fortescue Metals.
Shares in Commonwealth Bank were down 0.5 per cent at $104.04, Westpac slipped 0.8 per cent to $23.385, NAB fell 0.9 per cent to $30.785, and ANZ shed 0.9 per cent to $25.72.
Macquarie Group was also down, losing 0.8 per cent to $179.94.
The lead from Wall Street was a mixed one, while investors clearly remain nervous about the volatile cocktail of global inflationary pressures and Chinese Covid-19 controls.
A decisive change of government in Canberra may have given investors some certainty, although traders will no doubt be keen to see how Mr Albanese interacts with a huge crossbench of Greens and independents on matters of energy and the economy.
The Australian dollar climbed to near 71 US cents after Saturday’s poll.
“While it’s still not clear how the new government will be able to remedy surging inflation, one thing is clear: the majority of voters are shifting their focus to the betterment of day-to-day life amid the fading fears of the virus,” IG Markets analyst Hebe Chen said.
“A miracle (one of Scott Morrison’s favourite words) is probably not a need under the current circumstance, but the opportunity for a change is.”
Mining stocks were strong after iron ore rose 2.5 per cent to $US134.36 a tonne, boosted by China cutting its benchmark rate for mortgages.
BHP was up 1.2 per cent to $47.74, Rio Tinto rose 1.4 per cent to $109.91, and Fortescue Metals soared 2.2 per cent to $20.59.
Consumer giants were in the dumps with supermarket Woolworths slipping 1.3 per cent to $34.89, rival Coles 0.6 per cent down at $17.78, and Bunnings owner Wesfarmers dropping 0.9 per cent to $46.33.
The local index had risen 1.2 per cent in the final session of the week to record its first weekly gain since April.
In the US, mounting concerns over an economic recession were reaffirmed last week as the lacklustre retail sector hit the investors with more pains.
S & P 500 dropped 0.7 per cent on Friday, nearing bear market territory.
The Nasdaq dropped 3.8 per cent for the week, notching its seventh straight weekly decline, and has fallen 28 per cent from January 5.
Ms Chen said the new week ahead may cast a new surprise on the market as more retailers prepare to report, including Costco, Best Buy, and Macy’s.
Meanwhile, in the tech sector, Zoom, Nvidia and Alibaba will report their earnings this week.