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The share market wrapped up a losing week with a second-straight decline as borrowing costs on both sides of the Pacific tested multi-year highs.
The S&P/ASX 200 dropped 54 points or 0.8 per cent this afternoon to 6677.
For the week, the Australian benchmark lost 82 points or 1.2 per cent. The market has logged only one weekly advance in six weeks, and just two since mid-August.
Gains in energy producers and gold miners were outweighed today by declines across the broader market. Banks and property stocks were among the biggest drags.
What moved the market
Australian stocks tracked Wall Street lower as rising bond yields underlined expectations interest rates have further to rise, pushing the global economy closer to recession. The yield on ten-year US treasuries hit a fresh 14-year high overnight.
Here, the Australian ten-year yield moved to within two basis points of its June peak. The yield was lately up 15 basis points at 4.22 per cent after earlier hitting 4.24 per cent. A move above 4.256 per cent would mark the highest level since 2014.
“Bond prices fall while yields rise when there is an environment of rising interest rates. Rates are set to be lifted further in all economies, with hardly any breather, which is weighing on bond prices,” Kunal Sawhney, chief executive of research group Kalkine, said.
Overnight, the S&P 500 dropped for a second day, shedding 0.8 per cent as investors pared their exposure at the prospect of significantly higher rates. Federal Reserve Bank of Philadelphia President Patrick Harker said he expected benchmark rates “well above 4 per cent by the end of the year”.
“Even though the term unpredictable is continually used for the global stock market, it has become a little predictable. The market is failing to conserve and build on any rally, like the one we saw earlier this month, for no longer than a couple of days,” Kalkine’s Sawhney said.
“This month kicked off on a positive note, thanks to the surprise from the RBA in terms of a lower-than-expected rate hike. But things are again turning the same way they have been over the past many months. No greens seem sustainable this year, thanks to some data, either inflation or jobs market or growth forecasts, dealing a blow every subsequent week or fortnight.”
US futures remained in the doldrums this afternoon as a dire result from Snap weighed on firms that depend on online advertising. Shares in the social media firm dived 27 per cent in extended trade. Facebook owner Meta Platforms and Google owner Alphabet also dropped.
S&P 500 futures declined 12 points or 0.33 per cent. Nasdaq futures shed 0.7 per cent.
Winners’ circle
Coal mining provided most of the day’s best performers. New Hope surged 7.69 per cent to an all-time high. Coronado put on 5.73 per cent. Whitehaven added 4.59 per cent.
Telix Pharmaceuticals jumped 12.67 per cent as investors reassessed yesterday’s trading update. Gold miner Perseus climbed 5.85 per cent.
Event Hospitality firmed 3.52 per cent after settling a dispute with Vue International over the latter’s acquisition of Event’s German cinema operation. Event will receive $11.6 million to settle the matter.
At the heavyweight end of the market, energy giant Woodside added 2.63 per cent, Santos 0.93 per cent and gold miner Newcrest 0.12 per cent.
Outside the index, app maker Life360 rallied 7.31 per cent as subscription price increases helped offset news of a delay in revenue flow. The company announced it had pushed through higher prices for some of its US-based monthly premium offerings.
AMP finished unchanged after reporting outflows from its wealth management business were slowing. Net cash outflows last quarter were $800,000, an improvement on $1.9 billion of outflows in the same period last fiscal year.
“We have seen a significant improvement in our cashflows as more customers choose to join or stay with AMP,” CEO Alexis George said.
Doghouse
The big four high-street banks pulled back from multi-month highs. Bank stocks rallied earlier in the week after a strong earnings result from Bank of America underlined the income boost from higher rates.
This afternoon, Commonwealth Bank eased 1.48 per cent, ANZ 1.08 per cent, NAB 1.54 per cent and Westpac 0.79 per cent.
Goodman Group shed 3.63 per cent, Wesfarmers 2.37 per cent and Transurban 1.59 per cent.
A costs warning helped drag Allkem down 1.81 per cent. The lithium miner posted record quarterly revenue of US$150 million, but warned it expected the cost of production at its Mount Cattlin operation to rise 13 per cent to US$900 per tonne.
Insurer IAG dropped 2.06 per cent after telling today’s AGM it received 2,000 claims following recent flooding and rain damage in Victoria, NSW and Tasmania. CEO Nick Hawkins said the company had been increasing premiums. The insurer forecast mid-to-high single digit growth in gross written premiums this fiscal year.
Engineering group Worley eased 2.26 per cent after reaffirming full-year guidance.
Other markets
Asian markets were mixed. China’s Shanghai Composite rose 0.5 per cent. Hong Kong’s Hang Seng tilted towards its lowest close since 2009, dipping 0.17 per cent. The Asia Dow eased 1 per cent. Japan’s Nikkei lost 0.3 per cent.
Gold reversed overnight gains, falling US$11.20 or 0.68 per cent to US$1,625.60 an ounce.
Brent crude firmed 57 US cents or 0.6 per cent to US$92.95 a barrel.
The dollar faded 0.18 per cent to 62.63 US cents.
