The laggards

Shares in mining heavyweight BHP dipped 1.2 per cent, Rio Tinto was down 0.8 per cent and Fortescue slumped 1.9 per cent. The energy sector – down 1.6 per cent – also weighted heavily on the benchmark index. Woodside and Santos shares were down 1.8 per cent and 2.1 per cent, respectively. Yancoal lost 2.3 per cent.

The lowdown

Kodari Securities chief executive Michael Kodari said the equity market drifted lower as investors eagerly await the release of the gross domestic product (GDP) number for the March quarter on Wednesday. “This is an important number that should set the market tone for the remainder of the week,” he said.

“The market is braced for a weak number ... this would be seen by investors as mildly positive because it indicates the RBA’s tight monetary policy is working to slow the economy and ultimately reduce inflation.” However, a negative GDP number may spook the market and the RBA because that would point to a mild recession on the horizon, Kodari said.

On Wall Street overnight, the S&P 500 Index edged up by 0.1 per cent to 5283.40, even though the majority of stocks within the index fell. The Dow Jones Industrial Average dropped 0.3 per cent and the Nasdaq Composite Index rose 0.6 per cent.

Treasury yields also slid in the bond market after a report showed US manufacturing shrank in May for the 18th time in 19 months. Manufacturing has been hit hard by high interest rates meant to bring high inflation under control.

Stocks of companies whose profits are most closely tied to the strength of the economy dropped. That included the oil and gas industry, as the price of crude tumbled on worries about weaker demand growth for fuel. Iron ore prices also retreated.

On the winning side, some big technology stocks continued to perform strongly. Nvidia shares climbed another 4.9 per cent to bring its gain for the year to 132.2 per cent.

GameStop shares soared 21 per cent in a move reminiscent of its early 2021 rocket ride that shook Wall Street and brought the term “meme stock” into the parlance of our times. The market-moving news was that a Reddit account associated with a central character in the 2021 episode said it had built a stake of five million GameStop shares.

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In the bond market, the yield on the 10-year Treasury fell to 4.39 per cent, from 4.5 per cent late Friday. The two-year yield fell to 4.81 per cent, from 4.88 per cent.

This week features several high-profile economic reports that could send yields on sharp swings.

On Tuesday, the US government will show how many job openings employers were advertising at the end of April. On Friday, it will give the latest monthly update on overall growth for jobs and workers’ wages.

Quote of the day

“There was mismanagement; there was incompetence,” a former staff member at the Franchise Council of Australia said, as questions swirl about how the industry association will survive beyond the national Franchising Convention.

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AP