Market sinks on commodities, real estate gains, Brainchip tanks

The local market finished the week on a negative tone, falling 0.9 per cent as the country’s largest iron ore miners were hit by further falls in the price of the commodity. The entire sector fell 4 per cent driven loan by a 9.2 per cent fall in Champion Iron (ASX:CIA), an 8.2 per cent drop in Fortescue (ASX:FMG) and 5 per cent from the comparatively more diversified BHP (ASX:BHP). The energy sector also weakened, down 0.5 per cent, with utilities and real estate the major beneficiaries, gaining more than 1 per cent on hope of a smaller than expected rate hike on Tuesday. Shares in Macquarie Group (ASX:MQG) closed flat despite reporting a 13 per cent drop in profit to $2.3 billion. The asset management businesses were the hardest hit, with earnings dropping by 15 per cent on 2021’s bumper year, with the market and hedging division up 35 per cent compared to the first half. Popular with day traders, Brainchip (ASX:BNC) shares fell 21 per cent after reporting another US$3.8 million in quarterly outflows and little progress on their search for profitability. Among the highlights was Qube (ASX:QUB) and Vicinity (ASX:VCX) which added 5.1 and 4.3 per cent respectively. It was a broadly positive week despite the challenging finish with the S&P/ASX200 gaining 1.6 per cent buoyed by real estate, 6.9 per cent, and utilities, up 5.6 per cent.
 
Amazon hit by sales slowdown, Apple surprises, Dow outperforms
 
Shares in Amazon (NYSE:AMZN) fell 6.8 per cent in Friday’s session after the company guided to a significant slowdown in sales ahead of the holiday season. The company reported strong sales growth and the first profitable quarter for the year, hitting US$127 billion, but a slowdown in cloud computing and a return to shopping malls is set to hit the final quarter results. The result didn’t drag the Nasdaq, which gained 2.9 per cent, leading both the Dow Jones and S&P500 which added 2.6 and 2.5 per cent respectively. The strong day came after both the inflation print, and wage growth results showed signs of moderating increasing the likelihood of a slowdown in the torrid pace of rate hikes. Shares in Apple (NYSE:AAPL) were a rare highlight in the technology sector, gaining 7.6 per cent after reporting an unexpected 8 per cent jump in quarterly revenue to US$90.1 billion. The result was driven by a significant jump in Mac sales, which hit an all-time quarter record, but services revenue missed expectations. Across the week, all three benchmarks posted strong returns, with the Dow up 5.7, the S&P500 4 and the Nasdaq 2.2 per cent.
 
Tech takes a hit, Musk finally gets Twitter, China market weakens
 
All eyes were on China this week with President Xi Jinping finally realising the long awaited expectation that his term would be extended by another five years, and potentially for the rest of his life. The result was a further weakening in the sharemarket, with US$2.5 billion leaving the market on Monday, as global investors reduce their exposure for the time being. Despite the headlines, opportunities continue to grow within a region that is set to drive global growth for decades to come. After coming through 2022 mostly unscathed by the selloff, big tech took a significant hit this week with both Meta Platforms (NYSE:META) and Microsoft (NYSE:MSFT) selling off heavily as earnings results were weaker than expected. Apple was a rare standout, but the ballast of the index now appears to be under real pressure. Finally, it was all about Elon once again, with the Tesla founder finally taking control of Twitter and taking the company private in an effort to turn around its’ flagging fortunes. Musk sacked most key decision makers within the business as the first course of action.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.