The ASX200 is set for a wobbly start to trading, according to ASX Futures, trading down 19 points or 0.3% in anticipation of the market open.
It was a tumultuous night of trading in the US yesterday, with the S&P500 just scraping into the positive in the last 30 minutes of trading.
US and European markets
(Source: Commsec)
Chipmaking giant Nvidia’s earnings came in below expectations with a 4% decline in earnings from the previous quarter, causing the stock price to shed 2.9%.
The latest minutes from the US Fed also put a damper on things, with multiple officials insisting now is not the time to begin rate cuts and there is still a ‘ways to go’ to achieve a soft landing for the US economy.
Walgreens slid 2.5%, making way for Amazon.com, which gained 0.9% ahead of its imminent listing to the Dow Jones index, replacing the retail pharmacy stock.
Overall, the S&P500 gained 0.1%, the Dow also lifted 0.1% and the Nasdaq fell 0.3% or 50 points.
In Europe, banking stocks led the markets lower – HSBC in particular offered a disappointing earnings report, shedding 8.4% in its biggest one-day drop since April 2020. Bank stocks fell 1.1%.
Mining shares were also in the negative, shedding 0.8% after Glencore reduced its payout to investors after failing to meet earning expectations and losing 1.1% alongside Rio Tinto, which fell 1.5%.
The FTSE300 fell 0.2% and the UK FTSE100 0.7%.
Rio falls despite production lift
eToro market analyst Farhan Badami explores Rio Tinto’s latest earnings report and the reasons behind the stock’s decline.
“Iron ore, which is Rio Tinto's bread and butter, saw revenue decline due to lower prices, despite a 3% production increase,” Badami wrote.
“However, the company expects unit costs to remain stable in 2024, reflecting its focus on operational efficiency.
"Copper, another key commodity, saw similar trends, with lower prices offset by production growth.
“Labour inflation and tight market conditions have been major causes of concern impacting unit costs.
"Nevertheless, Rio Tinto's focus on operational efficiency helped mitigate some of these challenges and the company remained committed to its decarbonisation agenda.
“Looking ahead, Rio Tinto forecasts unit costs to fall within a specific range, indicating confidence in managing cost pressures.
“The mining giant also forecasted continued growth in production, particularly in copper, as key projects like Oyu Tolgoi ramp up. Unit cost guidance suggests some moderation in copper costs, reflecting higher volumes, while iron ore costs are expected to remain stable.
“Despite the headwinds, Rio Tinto rewarded shareholders with a generous final dividend of US$2.58 per share, representing a year-on-year increase. This move underscores the company's commitment to capital returns, even amidst a volatile market environment.
“That being said, challenges remain; geopolitical tensions, a potential slowdown in global growth and ongoing cost pressures could impact future performance.
“Rio Tinto will need to continue its focus on operational excellence, project development and cost control to navigate these headwinds and deliver sustainable value for shareholders."
Currencies and commodities
It was a mixed session against the US dollar.
The Euro lifted from US$1.0789 to near US$1.0815 by the close of market.
The Aussie fell, moving from US65.72 cents to near US65.45 cents, and the Japanese Yen followed, weakening from 49.43 yen per US dollar to 150.20 yen.
Oil prices lifted on continued tensions in the Middle East and indications supply will soon be constrained, gaining 1%.
Brent crude lifted by US$0.69 or 0.8% to US$83.03 a barrel, while US Nymex crude saw a rise of US$0.87 or 1.1% to US$77.91 a barrel.
Base metals also rose. Copper futures rose by 0.2%, and aluminium futures surged by 1.3% to a three-week peak in anticipation of supply disruptions due to the US and EU enacting sanctions against Russia over the death of opposition leader Alexei Navalny.
On the small cap front
The ASX Small Ordinaries shed 0.97% yesterday, following the ASX200 down as it lost 0.77%.
You can read about the following and more throughout the day on our website.
- Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF) has entered a cooperation agreement with Ajlan & Bros Mining & Metals Company to investigate co-investment projects in Saudi Arabia and the African continent.
- Piedmont Lithium (ASX:PLL, OTC:PLLTL) Inc has offloaded its Sayona Mining shares in a block sale via Cannacord Genuity – following the transaction, Piedmont will not longer hold any shares in Sayona.
- Miramar Resources Ltd (ASX:M2R) has kicked off several exploration programs across its Gascoyne projects
- Auric Mining Ltd (ASX:AWJ) is recommencing production activities at Jeffreys Find Gold Mine, targeting a minimum of 300,000 tonnes of gold ore for 2024, with mining to begin early in March.