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Australian shares have finished the session marginally lower, reversing early gains helped by heavyweight financials, while Qantas soared after the airline forecast a return to profit in the first half of 2023 fiscal year for the first time since the pandemic began.
Key points:
- The ASX 200 has lost more than 10 per cent since the year began
- Overnight, all three major Wall Street indices closed down
- The pan-European STOXX 600 index lost 0.5 per cent
The ASX 200 closed down 5 points, or 0.1 per cent, to 6,643.
By 4:21pm AEDT, the Australian dollar was down, trading at 62.73 US cents.
Shares of Qantas surged 8.7 per cent, to $5.62, after the company said it expected to swing to a first-half underlying profit of between $1.2 billion and $1.3 billion, up from a similar-sized loss the prior year.
The airline added it would improve its wages offer to staff at a cost of $40 million a year.
Qantas has faced industrial action from some unions over its previous policy of a two-year wage freeze followed by two years of 2 per cent rises amid high inflation in Australia.
It will now offer rises of 3 per cent following the two-year wage freeze.
Financials jumped 1.4 per cent, with the country's so-called "big four" banks rising between 1.9 per cent and 3 per cent.
Meanwhile, medical insurance firm NIB Holdings lost almost 12 per cent after it completed a $135 million placement at a discount.
Mining stocks shed 0.5 per cent as iron ore prices slumped for the third day in a row on Wednesday.
BHP dropped 0.8 per cent while Rio Tinto was up 0.6 per cent.
Lithium stocks also weakened, with Pilbara Minerals and Lake Resources falling 4.5 per cent and 3 per cent, respectively.
Healthcare and real estate stocks were down 1 per cent and 1.9 per cent, respectively.
Medibank investigates cyber incident
Medibank shares entered a trading halt pending the announcement of a cyber incident, and the health insurer confirmed it would remain closed for trading as it investigates.
On Thursday, the health insurer said it will isolate and remove access to some customer-facing systems after it detected unusual activity on its network.
The company said it took "immediate steps to contain the incident, and engaged specialised cybersecurity firms", adding that there was no evidence that any sensitive data, including customer data, had been accessed at this stage.
That incident follows a breach late last month at Optus, Australia's second-largest telecommunications provider, which compromised data of up to 10 million customers and triggered an overhaul of consumer privacy rules to facilitate targeted data sharing between telecommunications firms and banks.
Medibank said the isolation of several customer-facing systems would reduce the likelihood of damage to systems or data loss.
"As a result our ahm [Australian Health Management] and international student policy management systems have been taken offline. We expect these systems to be offline for most of the day," the health insurer said in a statement.
The company, however, said its health services would continue to be available to customers, and this "includes their ability to access their health providers, as we work through this incident".
'Fed is going to keep going'
Overnight, Wall Street ended a volatile trading session slightly lower after minutes from the last Federal Reserve meeting showed policymakers agreed they needed to maintain a more-restrictive policy stance.
The minutes of the September meeting showed many Fed officials stressed the cost of not doing enough to bring down inflation.
At the September meeting, Fed officials raised interest rates by three-quarters of a percentage point for the third straight time, in an effort to drive inflation down from 40-year highs.
Recently, Fed officials in their speeches have come out "in unison, regarding the Fed's commitment toward curtailing inflation and staying the course", said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.
"There's an understanding now the Fed is going to keep going. The question for the market is where is the transition from 75 basis points to 50 and 25. That is what the market is focused on I think."
Data released on Wednesday showed a surprise rise in September producer prices. The US Labor Department's producer prices index rose 8.5 per cent in the 12 months to September, slightly higher than an estimated 8.4 per cent rise. Still, the reading was lower than an 8.7 per cent increase in August.
The Dow Jones Industrial Average fell 28.34 points, or 0.1 per cent, to 29,210.85, the S&P 500 lost 11.81 points, or 0.33 per cent, to 3,577.03 and the Nasdaq Composite dropped 9.09 points, or 0.09 per cent, to 10,417.10.
There have been increasing fears among investors that aggressive rate hikes by the Fed could tip the world's largest economy into a recession.
Data on consumer prices on Thursday is likely to be key for investors, along with the start of third-quarter earnings, which kick off with results from big banks on Friday.
Meanwhile, the pan-European STOXX 600 index lost 0.5 per cent and MSCI's gauge of stocks across the globe lost nearly 1 per cent.
Markets volatile ahead of US CPI data
Global equity markets have been volatile in recent sessions as investors have worried about the impact that aggressive rate hikes by central banks would have on slowing economies.
Wall Street stocks had quickly flipped from green to red after the Bank of England (BoE ) governor, Andrew Bailey, said pension funds hit by a spike in UK gilt yields had three days to fix their problems before the BoE ends its emergency bond-buying scheme.
The BoE has also signalled privately to lenders that it is prepared to extend support beyond Friday's deadline if necessary, the Financial Times reported.
Wednesday's US inflation reading, the Producers Price Index (PPI), left expectations for the Fed's November rate hike intact. Still, investors were laser-focused on Thursday's Consumer Price Index (CPI).
"The market is looking ahead to the CPI release tomorrow," said Zaccarelli with some bulls hoping that, if inflation slows, it will give the Fed reason to "slow down or pause".
Oil futures fell for a third straight day as a stronger dollar and worries about weaker demand and rising interest rates outweighed supply concerns after last week's OPEC+ cut to its production target.
Brent crude oil was up, trading at $US92.61 a barrel, by 04:29pm AEDT.
ABC/Reuters