Both local benchmarks finished 1 per cent lower on Monday, as all eyes turn to the Reserve Bank of Australia’s two-day rate meeting. While experts are predicting rates to remain on hold, the focus will be on commentary around the potential for future rate hikes.
The S&P/ASX200 (INDEXASX: XJO) was dragged lower by the materials sector, one of the 10 sectors finishing in the red, as a 4 per cent fall in iron ore prices dragged it down 2.7 per cent. The likes of BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) both fell by more than 2 per cent.
It was a difficult day for gold miner Silver Lake Resources Ltd (ASX: SLR) with shares tanking by more than 11 per cent after Silver Lake announced the acquisition of smaller player, Red 5 Ltd (ASX: RED), in a bid for greater scale. Shares in tech darling Appen Ltd (ASX: APX) fell by 5 per cent to an all-time low after Appen confirmed that COO Ryan Kolln would take on the vacant CEO position.
Silver Lake share price
Renewable energy player jumps on Bingo deal: Metcash in halt amid takeover
Shares in energy producer Lgi Ltd (ASX: LGI) gained more than 4 per cent after LGI announced plans to spent $18 million in order to build a 4MW renewable energy project in Sydney. The partnership will seek to extract gas from Bingo Industries Eastern Creek Landfill asset.
Shares in Metcash Limited (ASX: MTS) entered a trading halt after the company confirmed it would raise $300 million in order to fund the purchase of Superior Foods, Australia’s third largest player in food services. The purchase is alongside two hardware companies, being Bianco and Alpine.
Metcash share price
Broker Citigroup Inc (NYSE: C) has upgraded expectations for reporting season suggesting that iron ore profits may be stronger thane expected, along with dividends, as Chinese steel production meant strong prices than most have in their forecasts.
Rate cuts to ‘take time’: Powell, Dow falls despite strong earnings
US benchmarks closed mostly lower on Monday, as strong economic data and a round of more cyclical earnings reports gave mixed signals to the market.
The Dow Jones Industrial Average (INDEXDJX: .DJI) fell 0.7 per cent, the S&P 500 (INDEXSP: .INX) 0.3 and the Nasdaq Composite (INDEXNASDAQ: .IXIC) 0.2.
The services index jumped from a seven month low to 53.5 per cent in January, while another 353,000 jobs were added. Combined with Fed Chair Powell’s 60 Minutes interview suggesting rate cuts may be sometime away, the market started with a negative tone.
Shares in Caterpillar Inc (NYSE: CAT) gained after Caterpillar reported the highest sales result in it’s 98 year history, as revenue gained 2.8 per cent. This was primarily source from energy and transport sales, which added 12 per cent, offsetting weakness in Asia and the other major divisions.
It was a similar story for makeup and beauty product provider Estee Lauder Companies Inc (NYSE: EL) with the company gaining more than 10 per cent despite announcing a 7.4 per cent drop in sales. This came on the back of weakening sales in China, but was significantly better than expected by analysts and accompanies with news that management would be laying off up to 5 per cent of the work force in the pursuit of profitability.
Shares in McDonald’s Corp’s (NYSE: MCD) also finished lower, despite an 8 per cent jump in revenue as global same store sales grew at a more mature 3.4 per cent.
