The consumer staples sector lost 0.5 per cent. Supermarket giants Coles (down 0.8 per cent) and Woolworths (down 0.5 per cent) slid after collectively setting aside a further $780 million to pay staff back for historical underpayments in what has already become the largest underpayment scandal in history.
Supermarket giants Coles and Woolworths dipped in early trade.Credit: Getty
On Friday, the Federal Court determined that Australia’s two largest supermarket companies failed to keep accurate records of staff rosters, overtime and other entitlements for workers who were paid a salary for years stretching back more than a decade.
Discretionary spending stocks fell even further, as BCF and Rebel Sport owner Super Retail went ex-dividend and slid 4.2 per cent to $18.05 – the top-200’s worst performance of the day. Segment leader Wesfarmers fell 0.8 per cent.
The lifters
IT stocks offered investors relief, up 1.4 per cent on Monday as Xero (up 1.3 per cent) continued to rebound from five-month lows, and Life360 surged 6.2 per cent to $48.51, adding to the tracking software’s more than 100 per cent rally in 2025. It was the day’s strongest stock.
The healthcare sector pushed higher, as CSL jumped 2 per cent to $213.37 after announcing a share buyback. CSL is still down more than 20 per cent since announcing it would cut 3000 jobs and spin off its vaccine arm over uncertainty brought by the Trump administration’s trade policies. Mesoblast also rallied, up 4.3 per cent, one the day’s top five performers.
The lowdown
The historically grim market month of September is living up to its reputation, with Australian shares resuming their push lower.
While the market started the week lower, hundreds of millions of dollars in incoming dividends may provide investors with more dry powder to support the market.
Despite the shift lower, Australian shares were looking at a better trading week ahead after last week’s 1.1 per cent stumble, Moomoo market strategist Michael McCarthy said.
“Both a greater chance for interest-rate cuts in the US and the payment of more than $700 million in dividends to ASX shareholders this week are expected to support the local market.”
Loading
More than 100 companies will hand cash back to shareholders between now and mid-November, which could spell short-term pain for share prices but ultimately provide investors more liquidity for reinvestment.
Monday’s unconfident start tracked with a similar move on Wall Street on Friday after US jobs figures significantly undershot expectations, stoking simmering fears about growth in the world’s largest economy, despite narrowing bets on rate cuts.
On Tuesday, investors will be keeping watch on consumer and business confidence surveys after the Reserve Bank cut interest rates in August for the third time this year, and further easing forecast, lowering borrowing costs for businesses and boosting consumer confidence.
“There’s more [cuts] to come and with inflation now back within the RBA [Reserve Bank of Australia] target band, there’s less reason than ever be avoiding the ASX 200,” IG market analyst Tony Sycamore said.
On Friday in New York, US stocks wobbled lower as Wall Street questioned whether the US job market has slowed by just enough to get the Federal Reserve to cut interest rates to help the economy, or by so much that a downturn may be on the way.
The most traded shares on IG Markets.Credit: IG Markets
After rising to an early gain, the S&P 500 erased it and fell 0.3 per cent below the all-time high it set the day before. The Dow Jones dropped 220 points, or 0.5 per cent, after swinging between an early gain of nearly 150 points and a loss of 400. The Nasdaq composite edged down by less than 0.1 per cent.
The action was more decisive in the bond market, where Treasury yields tumbled after a report from the Labor Department said US employers hired fewer workers in August than economists expected. The government also said that earlier estimates for June and July overstated hiring by 21,000 jobs.
The disappointing numbers follow last month’s discouraging jobs update, along with other lacklustre reports in intervening weeks, and traders are now betting on a 100 per cent probability that the Fed will cut its main interest rate at its next meeting on September 17, according to data from CME Group. Investors love such cuts because they can give a kickstart to the economy, but the Fed has held off on them because they can also give inflation more fuel.
Loading
So far this year, the Fed has been more worried about the potential of inflation worsening because of President Donald Trump’s tariffs than about the job market. But Friday’s job numbers could push the Fed to consider cutting rates in two weeks by a steeper amount than usual, said Brian Jacobsen, chief economist at Annex Wealth Management.
“This week has been a story of a slowing labour market, and today’s data was the exclamation point,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
Strong hiring for healthcare jobs had been helping to support the overall market, “but with it now showing some tangible signs of decline, the foundation underneath the labor market seems to be cracking,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.
While the data on the job market is disappointing, it’s still not so weak that it’s screaming a recession is here, and the US economy is continuing to grow. A big question for investors is whether the job market can remain in a balance where it’s not so strong that it prevents cuts to interest rates but also not so weak that the economy falls off.
Uncertainty about that helped lead to Friday’s swings in the sharemarket. Wall Street needs things to go as hoped because it already sent stock prices to records amid expectations for a Goldilocks scenario where interest rates ease, and the economy keeps chugging along.
On Wall Street, Friday’s heaviest weight was Nvidia, the chip company that’s become the face of the artificial-intelligence boom. It’s been contending with criticism that its stock price charged too high, too fast and became too expensive following Wall Street’s rush into AI, and it fell 2.7 per cent.
Lululemon dropped 18.6 per cent after the yoga and athletic gear maker’s revenue for the latest quarter fell short of analysts’ expectations. Chief executive Calvin McDonald pointed to disappointing results from its US operation, while Chief financial officer Meghan Frank said Lululemon was facing “industry-wide challenges, including higher tariff rates.”
Still, more stocks rose on Wall Street than fell. Leading the way was Broadcom, which climbed 9.4 per cent after reporting better profit and revenue for the latest quarter than analysts expected. Chief executive Hock Tan said customers were continuing to invest strongly in AI chips.
Tesla rose 3.6 per cent after proposing a payout package that could reach $US1 trillion ($1.5 trillion) for its CEO, Elon Musk, if the electric vehicle company meets a series of extremely aggressive targets over the next 10 years.
With AAP, AP
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.