ASX falls as annual inflation hits 7.8pc, Wall Street lower, Murdoch drops Fox News Corp plans, US sues Google
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The Australian share market has dropped on Wednesday, ending a five-day winning streak, as inflation hits 7.8 per cent.
The higher-than-expected jump in consumer prices has all but cemented another rate hike. It follows US stocks ending a mixed session, while Google is being sued by the US Justice Department and Rupert Murdoch has walked away from a proposal to reunite News Corp and Fox.
See how the trading day unfolded on Wednesday January 25.
Disclaimer: this blog is not intended as investment advice.
By Rhiana Whitson
And that's a wrap for today's market blog on Wednesday, December 25. Thanks for reading.
By Rhiana Whitson
Above is a breakdown of best and worst sectors and stocks on the ASX 200.
Stay tuned for a markets snapshot before I clock off for the day.
By Rhiana Whitson
In more US company news, Rupert Murdoch has called off a proposal to reunite News Corp and Fox Corp after it was resisted by shareholders.
The deal would have reunited a media empire he split nearly a decade ago after the UK phone hacking scandal.
Prominent News Corp investors have been critical of the proposal.
And now Mr Murdoch has sent a letter saying that he and his son, who is the CEO of Fox Corp, decided the move is "not optimal" for shareholders.
In a statement released on Wednesday, News Corp said:
"In withdrawing the proposal, Mr. Murdoch indicated that he and Lachlan K. Murdoch have determined that a combination is not optimal for shareholders of News Corp and FOX at this time.
"As a result of this action, the Special Committee of the Board of Directors of News Corp has been dissolved. The Board would like to express its appreciation for the Special Committee’s efforts on this matter."
The timing of the announcement comes as News Corp is in talks to sell its stake in US real estate listing company Move to rival CoStar for about $3 billion.
News Corp owns about 80 per cent of Move, while the remaining 20 per cent is held by its Australian real estate arm REA Group.
In an update to the ASX, REA Group confirmed the talks with Costar.
REA Group says there is "no guarantee that these discussions will result in parties entering into any transaction."
REA Group's share price fell 0.4 per cent to $122.15.
ABC News/Reuters
By Rhiana Whitson
Companies shied away from listing on the stock exchange last year and those that did mostly struggled to hit their funding targets.
There were 87 new listings in 2022, compared to 191 in 2021, representing a fall of 54 per cent, according to IPO Watch Australia's 'Review of Australia's 2022 IPO Activity Report.'
"Initially there were solid expectations for the year following a record number of listings in the second half of 2021 and a healthy pipeline of companies looking to list in early 2022," IPO Watch Australia Partner Marcus Ohm notes.
"However, the IPO market all but dried up in the second half of the year with no single month from June onwards recording a double-digit number of listings."
Total funds raised in 2022 reached $1.07 billion compared to the record-breaking amount raised in 2021 of $12.33 billion, the report notes.
"The amounts raised were also significantly below 2020 ($4.98 billion) and 2019 ($6.91 billion). Notably, there were fewer listings in 2020 (74) and 2019 (62) than in 2022, reflecting the contributions from large cap listings in these prior years."
Mr Ohm says materials listings dominated the market again, with 63 new market entrants in the year compared to 107 in 2021.
"Gold and battery metals, in particular lithium, have been popular commodities for exploration listings this year," he says.
The report also found new listings struggled to meet subscription targets during the year, with only 70 per cent successfully raising the intended amount. That's compared with 87 per cent of listings meeting their targets in 2021.
IPO Watch Australia expects the slowdown in IPO activity to continue into 2023.
"Against the backdrop of rising interest rates, rising inflation and geopolitical uncertainty, there was a significant decrease in the number of IPOs in the second half of 2022, notably in the technology sector," IPO Watch Australia Partner Nicholas Guest notes in the report.
By Rhiana Whitson
As prices rise and consumers feel the pinch there are some signs of a slowdown in spending.
According to the bank's monthly transaction data for December:
Consumer spending fell 0.3%
Retail spending down 0.9%
Business credits fell 0.4%
“Our monthly transaction data indicates that spending softened in December after a solid rise in November, largely driven by weakness in retail goods and spending on fuel, while discretionary spending showed some strength," NAB Chief Economist Alan Oster says.
“The fall-off in retail may reflect changes in seasonal spending patterns, with Black Friday and early Christmas shopping potentially bringing spending forward from December.
"Putting aside the month-to-month volatility, retail spending appears to have levelled off in recent months.”
“While total spending was up 1.6% in the December quarter, this is the slowest quarterly growth rate this year, and growth in volumes is likely to be lower given still high inflation.”
By Rhiana Whitson
Here's a wrap of best and worst performing stocks as we head into the last couple of trading hours:
By Rhiana Whitson
Here's ABC finance presenter Alicia Barry talking to KPMG chief economist Brendan Rynne about today's higher-than-expected inflation figures:
You can read more about the latest CPI figures and what they mean for interest rates here:
By Rhiana Whitson
Higher-than-expected inflation means the Reserve Bank is more likely to hike interest rates again next month, and that spooks investors.
This is how things are looking shortly after midday:
By Rhiana Whitson
Inflation has come in higher than expected, with the Bureau of Statistics’s official Consumer Price Index up 7.8 per cent over the year to December.
Economists were generally expecting a 7.5 per cent annual increase in prices, slightly increasing the chances of another Reserve Bank interest rate rise next month.
By Rhiana Whitson
It's been a choppy kind of morning on the ASX.
Every time I hit refresh, the ASX 200 has edged higher or lower.
It's currently down 0.50 pointsto 7,489.
By Rhiana Whitson
Despite ASX futures pointing to a fall at the open, both indices are edging higher.
The ASX200 isup 4.10 points todayto 7,494.
The broader All Ordinaries is up 0.2% to 7,710.
All sectors were in the green at 10:30am AEDT.
Here's a snapshot of top and bottom stocks:
By Rhiana Whitson
Daniel Ives and Daniel Katsingris, analysts at Wedbush, reckon it'll be one of the most important moments in the history of Tesla and Elon Musk himself. Why?
"After experiencing unprecedented hyper growth over the past few years in the EV market which was essentially created by Musk, now Tesla faces a darker macro in 2023 with fierce competition coming from all angles. Adding to that backdrop is Musk who has essentially gone from a superhero with a red cape to a villain in the eyes of many investors after the ongoing Twitter fiasco has cast a dark shadow over Tesla's stock," the say.
Elon Musk has been in the witness stand to defend against allegations that he misled Tesla investors:
By Rhiana Whitson
Here are the bottom and top movers on the S&P 500 for Tuesday (US time). The index slipped by close to 3 points to close at 4,016.
By Rhiana Whitson
Local markets will be digesting quarterly inflation data from the Australian Bureau of Statistics when it's released at 11:30am AEDT.
CBA economist Kristina Clifton says major economies have shown an easing in the annual rates of inflation, largely because of lower goods inflation (see chart) due to an easing in commodity prices, dissipating supply chain disruptions, and slowing goods demand.
However, she says the annual rate of services inflation has continued to lift because wages growth is still too strong in most of the major economies.
"We expect the central bank interest rate tightening of 2022 (and likely 2023) to slow the pace of services inflation over 2023, through a loosening in labour markets and higher unemployment rates," Ms Clifton says.
"A global slowdown typically supports the USD, particularly against the cyclical currencies like AUD and NZD."
By Rhiana Whitson
US markets results have settled with the Dow Jones Industrial Average ending the day higher.
The Dow added 0.31%, to close at 33,733.
The S&P 500 slipped 0.07% to settle at 4,016, while the Nasdaq Composite fell by almost 0.5% to finish the day at 11,334.27.
The trading session started with what's been reported as a technical malfunction, causing a bunch of stocks to be temporarily halted.
More than 80 stocks were affected by the glitch, which caused wide swings in opening prices in dozens of stocks, including Walmart and Nike.
Alphabet Inc (Google) shares dipped after the Justice Department filed a lawsuit against Google for abusing its dominance of the digital advertising business.
Johnson & Johnson's profit guidance came in above analyst expectations.
Industrial conglomerates 3MM and General Electric provided underwhelming forward guidance due to inflationary headwinds.
3M's shares lost ground, while General Electric posted modest gains.
Railroad operator Union Pacific Corp as labour shortages and severe weather delayed shipments.
ABC News/Reuters
By Rhiana Whitson
3M shares fell 4.7% as it joined other industrial majors General Electric Co and Raytheon Technologies Corp in flagging a hit from inflation in 2023.
Demand slowdown has extended into the current quarter as consumers cut discretionary spending and rigorous industrial de-stocking, especially in Asia, 3M said.
"Three weeks into January, we are seeing continued slowing in organic sales volume as we start the year," Chief Financial Officer Monish Patolawala said.
The company, which has been battling with higher labour and energy costs, said it would continue to adjust its manufacturing levels and maintain spending discipline until volumes bounce back.
3M expects adjusted sales in the first quarter to be $US7.2 billion to $7.6 billion, down 10% to 15% since last year.
"We expect macroeconomic challenges to persist in 2023," Chief Executive Mike Roman said.
Sales in the fourth quarter fell 6% to $US8.1 billion.
The downbeat outlook and quarterly results pile more pain on the company, at a time it faces separate lawsuits related to defective earplugs and its use of "forever chemicals", which 3M said in December it plans to discontinue.
ABC News/Reuters
By Rhiana Whitson
What's going on? Well, Google stocks fell 2.1 per cent as the US government launched fresh legal action in a bid to smash the tech giant's advertising monopoly.
The US Justice Department's accused the company of abusing its dominance of the digital advertising business.
The US government wants the court to compel Google to break up its ad technology business.
"Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies," the antitrust complaint said.
Google responded to the lawsuit, saying the government was "doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow."
The US federal government says it's trying to level the playing field for rivals to Big Tech companies including Amazon.com , Facebook owner Meta Platforms and Apple Inc.
By Rhiana Whitson
Good morning, I'm Rhiana Whitson and I'll be running the markets blog today.
Here's how the market is looking shortly before 7am AEDT:
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