ASX slips back below 8000 as BHP, Rio Tinto weigh; DroneShield sinks

The Australian sharemarket snapped a three-day winning streak on Tuesday to fall just below the historic 8000-point threshold surpassed in the previous session.

The benchmark S&P/ASX 200 closed down 18.3 points, or 0.2 per cent, to 7999.3 points, shrugging off gains on Wall Street as US traders continued to weigh the prospect of a third rate cut from the Federal Reserve.

Overnight on Monday, Fed chairman Jerome Powell said second-quarter data bolstered confidence that inflation was cooling, while Goldman Sachs said conditions were ripe for easing.

On the ASX, the rate-sensitive real estate sector gained 0.8 per cent and was the only industry of the index’s 11 to push meaningfully higher.

‘Under threat’

IG analyst Tony Sycamore said investor sentiment that helped drive the local bourse above 8000 for the first time on Monday had come “under threat”.

“The more cautious tone follows yesterday’s disappointing batch of Chinese economic data, which has weighed on commodity prices and the heavy-weight ASX 200 materials sector,” he said.

Indeed, the data showed that China’s economy had expanded by 4.7 per cent in 2024’s second quarter, down from 5.3 per cent in the previous quarter and below expectations of 5.1 per cent growth.

During trading in Singapore on Tuesday, iron ore futures fell as much as 1.6 per cent, before paring back losses to be around 0.3 per cent lower at $US108.50 per tonne by the close of trading in Sydney.

Materials stocks were the largest drag on the index, falling 0.9 per cent. BHP slipped 1.4 per cent down to $43.01. Consumer discretionary, utilities and technology stocks also fell after all charging higher on Monday.

Stocks in focus

In corporate news, Rio Tinto fell 2.5 per cent to $116.81, after revealing its copper production would come in at the lower end of guidance alongside a slip in its first-half iron ore production.

Rio has also received approval from Guinean and Chinese authorities to invest $US6.2 billion ($9.2 billion) into the Simandou high-grade iron ore project and surrounding infrastructure.

Fellow mining company IGO said it would write down as much as $295 million in impairments in its upcoming full-year report after a review of its nickel assets. The shares fell 0.7 per cent to $5.96.

Electric Optic Systems was 6.2 per cent higher at $1.72 after revenue soared 92 per cent in the first half of 2024 due to increased weapon systems orders from an undisclosed Middle East client.

Genex Power gained 1.9 per cent to 27.5¢ after buyout bidder J-Power increased its stake in the company to more than 14 per cent shortly before shareholders voted in favour of the $380 million deal.

And finally, an unexpected sell-off in defence tech developer DroneShield, which began around midday, pulled the shares down nearly 30 per cent lower before trading was halted.

The company noted in a statement to the ASX a media report released earlier that day, in which two fund managers cast doubt on the company’s near-500 per cent rally in the past 12 months. The shares ended the session 22.3 per cent lower at $2.02 after being reinstated shortly before the end of trading.