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The Australian market is down 1% week-to-date and closed 0.7% lower on Friday, weighed down by the materials sector. Materials dropped more than 3% on Friday and just over 6% in the week. This was mostly driven by a pullback in iron ore prices, with concerns about weak demand from China, with recurring COVID-19 outbreaks, as well as low profitability at Chinese steel mills. On top of this, there are also concerns over the Chinese property market and banking sectors, so these reports pushed iron ore prices into a bear market, and overshadowed reports of large stimulus packages in China. Rio Tinto (ASX:RIO)’s share price dropped on Friday with the fall in iron ore and the release of its quarterly update. The miner provided a bearish outlook, describing some difficulties facing China’s recovery from the pandemic lockdowns, as well as the impacts of the Fed’s rate hikes on demand. Goldman Sachs retain their Buy rating on RIO, so keep watch of its share price today. The broker says its share price could be great value and have slightly trimmed their price target to $124.10.
Materials stocks fell across the board on Friday, however the worst performer was investment manager Pendal (ASX:PDL) after the group reported worse-than-expected outflows in the June quarter from its managed funds.
China’s GDP growth missed expectations in the second quarter, sending Chinese markets lower. Despite this, European markets gained, with the Stoxx-600 up 1.8% by the close. And in New York, US equities rallied, following a round of major banks reporting their earnings results. The Dow Jones gained more than 600 points or 2.2%, the S&P500 up 1.9% and the Nasdaq gained 1.8%.
What to watch today: