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ASX drifts lower on China woes

The ASX200 drifted lower in a quiet day of trading on June 14, 2024. Picture: NCA NewsWire / Christian Gilles
The ASX200 drifted lower in a quiet day of trading on June 14, 2024. Picture: NCA NewsWire / Christian Gilles

The Australian share market drifted lower in quiet trading on Friday to end the week down as investors grappled with extended weakness in China and a slump in iron ore prices.

The benchmark ASX200 slipped 25.4 points, or 0.33 per cent, to close at 7724.3, while the broader All Ordinaries Index fell 0.35 per cent, or 27.7 points, to finish at 7974.8.

Tech stocks fell sharply, sinking 1.13 per cent, or 35.2 points, to 3091.7.

Friday’s fall pushed the ASX200 to a 1.7 per cent decline across the week.

The battered local bourse contrasts with a tech-led melt-up on Wall St, with the S and P 500 and Nasdaq indexes hitting fresh highs overnight on Thursday.

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The S and P 500 lifted 0.23 per cent per cent to close at 5433, while the Nasdaq rose 0.34 per cent to close at 17,667, powered by chip behemoth Nvidia’s 3.5 per cent surge.

But IG market analyst Tony Sycamore said Australia’s exposure to China meant the US tech rally wasn’t enough to shield Aussie stocks.

The ASX200 slipped 0.33 per cent across the June 14 trading day. Picture: NCA NewsWire / Christian Gilles
The ASX200 slipped 0.33 per cent across the June 14 trading day. Picture: NCA NewsWire / Christian Gilles

“At the top of the equity markets, we have the Nasdaq way out in front, up about 3 per cent as it melt up continues,” he said.

“Down the bottom we’ve got the French stock market down about 3.7 per cent. Also down the bottom is everything China related, so A50, and the ASX200, all down about 1.7 to 1.8 per cent.

He said the price action shows the ASX200 “firmly hitched” its bandwagon to the issues which China is currently experiencing.

Mr Sycamore said this results in subpar growth, tariffs and concerns that deflationary spiral continues to linger over the Chinese economy.

“So without those tech stocks, it means our ASX200 is destined to trade lower to sideways,” he said.

“It’s just ignoring what Wall St is doing and for good reason. We just don’t have those technology stocks. We are very heavy in the materials, resource stocks, which are struggling.

“Even with crude oil up 3.5 per cent this week, the energy sector hasn’t had a good week at all. It is down about 1.59 per cent. We’re so exposed to China and China is on track for its fourth down week in four.”

He said: “It’s not looking particularly good over there.”

Nine of 11 industry sectors recorded declines, led by telecommunications with a 1.06 per cent fall.

Falls in iron ore prices have hit miners like Rio Tinto: NCA NewsWire / Sharon Smith
Falls in iron ore prices have hit miners like Rio Tinto: NCA NewsWire / Sharon Smith

Only the discretionary and healthcare sectors eked out small gains, at 0.19 per cent and 0.13 per cent, respectively.

Mining giants BHP, Rio Tinto and Fortescue continued to sell-off on Friday as iron ore prices fell below $105 per tonne.

BHP fell 0.25 per cent to $43.09 a share, while Rio slipped 0.35 per cent to $120.20 and Fortescue fell nearly 1 per cent to hit $23.20.

Energy behemoths Woodside and Santos both fell, with Woodside tumbling 1.02 per cent to $27.26 a share and Santos edging down 0.13 per cent to $7.47.

In corporate news, Telix Pharmaceuticals announced it would withdraw from a US IPO.

“Given the proposed Nasdaq listing was not predicated on the need to raise capital, Telix’s management and board of directors have decided not to move forward with the transaction at the terms provided under current market conditions,” the firm said in an ASX statement.

The stock closed up 0.91 per cent to end the day at $16.61 a share.

The top gainer on the ASX200 was gambling company Tabcorp Holdings, which soared 10 per cent to 66c.

The biggest laggard was Deterra Royalties, which tumbled 6.95 per cent to $4.15 on the news it had made an all-cash offer for British lithium company Trident Royalties.

The Aussie dollar lost 0.2 per cent against the Greenback to buy US66.2c at the closing bell.