The ASX has dipped today, dragged down by banks and tech stocks. Mining has rallied.
The S&P/ASX200 dropped 56.60 points or 0.78% to 7,230.00, crossing below its 125-day moving average. Over the last five days, the index has gained 1.42% but is down 2.88% for the last year to date.
Bottom-performing stocks in this index are Zip Co Ltd (ASX:Z1P)down 5.64% as part of the tech stock rout and Suncorp Group Ltd, down 5.86% as part of the bank rout. Neither company had any news to directly shift its price.
ABS Building Approval Data
The Australian Bureau of Statistics released its Building Approval Data today, showing dwelling approvals are well down from April 2021 levels following a 32.4% decrease.
CreditorWatch’s chief economist Anneke Thompson said of the figures, “Building approvals over 2020/21 were incredibly strong, emphasising the success of the Australian Home Builder Grant, with approvals peaking in March 2021.
"We expect that the end of the HomeBuilder Grant combined with significantly rising costs in the construction sector will cause a steady decline in building approvals throughout 2022.
"Most builders and sub-contractors are at workload capacity, and poor weather in NSW and Queensland exacerbated by the late delivery of building supplies across the country has delayed many existing projects, reducing the capacity for future approvals.
“In addition, rising interest rates will result in reduced demand for new homes, which in time should help cost and capacity pressures in the industry. It may also help reverse the growing number of construction companies unable to meet payment deadlines.
CreditorWatch data has shown the sector is a repeat offender when it comes to late payment time. 12% of construction companies average more than 60 days in payment arrears which has kicked off a trend for contractors who are focusing more on government contracts where their pay cheques are certain, impacting available builders to complete work.”
Reduced spending, not taxation
Australia’s new government has said it will not introduce additional taxes to bring down the current deficit but will look to reduce spending.
Treasurer Jim Chalmers told Sky News, “We’re not contemplating a budget-repair levy. We think the first port of call is to trim spending.”
The government says it will keep its election promises and find places to save money.
“Katy Gallagher and I have begun already an audit of rorts and wastes,” Dr Chalmers said. “We want to redirect that political, unproductive spending into more productive investments where you get an actual economic dividend.”
National accounts will be released tomorrow and are expected to show slow growth, with Dr Chalmers distancing the government from the expected backlash.
“Remember, these accounts are for the first three months of the year and the year began with that absolute debacle over rapid testing which led to all those supply issues and grocery shortages.
“Inflation has spiked, real wages have gone back further. There’s no shortage of economic challenges.”
NAB forecasts 0.7% GDP
NAB has upgraded its March quarter GDP forecast to 0.7% from 0.1%.
The upgrade comes off strong inventories and public consumption data released today.
Inventories surged 3.2%. According to NAB, this may contribute 0.6 percentage points to GDP, reflecting a surge in import volumes. Net exports are due to detract 1.7%.
Public sector consumption remained strong at 2.7% on-quarter, on the back of pandemic health spending.
"Overall, today’s data remain consistent with a continuation of the consumption-led rebound out of Q3 lockdown impacts," NAB economist Taylor Nugent said.
"The drivers of the upward revision to our Q1 forecast reflect strength in imports showing up in a higher-than-expected inventory build and higher public demand in Q1.
"Disruptions from Omicron weighed early in the quarter, but nonetheless real total sales in Accommodation and Food Services and Arts and Recreation, two industries heavily impacted by COVID, continued to recover.
"The rise in inventories suggests that firms have had more success with rebuilding inventories in the first quarter and is consistent with the sharp rise in import volumes."
On the small cap front
The small cap market is in the green today with the S&P/ASX Small Ordinaries lifting 1.84%.
The one-year return, however, is down 6.78%.
Here’s a look at some of today’s winners.
- Caspin Resources Ltd finished 11.11% higher.
- Firefinch Ltd finished 0.91% higher.
- Shree Minerals Ltd finished 10% higher.
- Triangle Energy (Global) Ltd finished 7.69% higher.
- Musgrave Minerals Ltd finished 3.33% higher.
- Critical Resources Ltd finished 2.5% higher.
- Emyria Ltd finished 1.85% higher.
- Tempus Resources Ltd finished 15.71% higher.