Australian shares have recovered from their early losses, as copper prices dropped to a 16-month low and commodity prices continued to slump over worries about a global economic slowdown.
The ASX 200 fell slightly when trading began on Friday morning. However, it had risen by 0.3 per cent, to 6,546 points, by 11:45am AEST.
Materials and energy stocks were the biggest drags on the market, including including South32 (-3.5pc), Ampol (-3.4pc), Santos (-2pc), Newcrest Mining (-2.1pc), Rio Tinto (-1.9pc), BHP (-1.4pc).
On the flip side, the local technology sector rebounded, led by Zip Co (+9pc), Life360 (+12pc), Appen (+5.7pc), and Tyro Payments (+5.1pc).
The Australian dollar rose slightly to 69 US cents on Friday morning. But that was after a 0.5 per cent slide overnight.
Qantas cuts domestic flights
Qantas will reduce its number of domestic flights through March 2023, as the company grapples with higher fuel prices and staffing issues at airports that are affecting much of the industry worldwide.
The airline said it remained on track to swing to a profit in the next financial year starting July 1, and had reduced its debt to below pre-pandemic levels.
Qantas has been able to recover the cost of high fuel prices in the international market through higher fares, chief executive Alan Joyce said this week, but has been unable to do so in the domestic market.
The latest round of capacity cuts for July and beyond will take domestic capacity to 99 per cent of pre-pandemic levels in the first quarter and 106 per cent in the second quarter, Qantas said.
Most of the capacity will be cut from high-frequency routes, the airline said.
It comes as the airline’s on-time performance levels have been falling and Australian airports have been struggling to secure enough workers after mass lay-offs during the pandemic.
Qantas seeking 2pc pay rise, Jetstar boss resigns
Qantas said it planned to give $5,000 bonuses to up to 19,000 staff when they signed fresh union contracts after a two-year wage freeze during the pandemic.
The company is trying to negotiate a new enterprise agreement with staff that allows for a 2 per cent pay increase each year — well below the current rate of headline inflation (5.1 per cent).
On Friday, Qantas also announced that Gareth Evans, the head of its low-cost airline, Jetstar, would step down from his role in December.
Investors and analysts have seen Mr Evans as one of the top contenders to succeed Mr Joyce — the chief executive of Qantas since 2008 — when he eventually steps down.
Several other potential successors have already left over the years for CEO roles elsewhere, due in part to Mr Joyce’s unusually long tenure.
Qantas stocks rose slightly, by 0.2 per cent.
High inflation weighing on investors
Meanwhile, US Federal Reserve chairman Jerome Powell testified before Congress for a second day — a day after saying the Fed was committed to cutting inflation at all costs, and acknowledged a recession was “certainly a possibility.”
Investors have been weighing the risk of hefty interest rate rises tipping economies into recession.
“What we’re seeing here is a [stock] market trying to absorb the Fed’s tightening and basically trying to put in a low in a bear market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We have [bond] yields that are coming down, and so that’s helping stocks.
‘Market is confused’
On Wall Street, the Nasdaq Composite rebounded by 1.6 per cent, to 11,232 points, as technology and growth stocks outperformed.
The Dow Jones index closed 0.6 per cent higher, at 30,677, and the S&P 500 jumped 1 per cent, to 3,796.
On European markets, Germany’s DAX and Britain’s FTSE fell sharply, by 1.8 per cent and 1 per cent, respectively.
Trading has remained volatile in the wake of the S&P 500 last week logging its biggest weekly percentage drop since March 2020.
Investors are weighing how far stocks could fall after the index earlier this month fell over 20 per cent from its January record high, confirming the common definition of a bear market.
“There is a tremendous amount of uncertainty about the outlook and so the market is confused,” said Walter Todd, chief investment officer at Greenwood Capital in South Carolina.
The price of copper slumped as rising interest rates and weak economic data fed worries about demand.
On the London Metal Exchange (LME), the price of the industrial metal fell by 3 per cent, to $US8,397 a tonne, and hit its lowest since February 2021.
Copper has plummeted by more than 20 per cent from its record high of $US10,845 in March.
Spot gold dropped 0.8 per cent, to $US1,822.55 an ounce.
On oil markets, Brent crude futures fell 1.7 per cent, to $US109.80 a barrel.
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