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Speculative mining investments faced heavy selling as the share market fell for a third day.

The S&P/ASX 200 closed 11.5 points or 0.16 per cent lower after an initial 51-point bounce faded ahead of tonight’s US rates decision.

Gains in energy and banking stocks were offset by declines in miners, real estate investment trusts and tech stocks.

What moved the market

The headline figures disguise heavy selling at the speculative end of the market. The S&P/ASX Emerging Companies Index fell 2.35 per cent to an eight-week low. The Small Ords sagged 1.5 per cent.

Sharp overnight declines in base metals and iron ore set the scene for a sobering session for investors in junior miners. The high-flying lithium sub-sector was hit particularly hard.

Commodity prices fell sharply overnight as China tightened Covid restrictions and traders prepared for higher interest rates. Copper, sometimes referred to as the “metal with the degree in economics”, dropped to its lowest level since January.

Notable losses included Metals Australia -23.08 per cent Pepinni Metals -22.73 per cent and Nico Resources -22.73 per cent. Hawthorn Resources gave up 21.05 per cent and CZR Resources 20 per cent. White Rock Minerals sank 32.5 per cent after a discounted capital raising.

The market’s early gains dissipated ahead of a Federal Reserve rates announcement. The US central bank is expected to raise its target rate by 50 basis points tonight as part of a global move to rein in runaway inflation.

“Money markets have priced in a 99.8% chance of that happening, but the tone of today’s decision could either confirm or bring into doubt the market’s confidence of multiple 50-bps hikes,” City Index senior market analyst Matt Simpson said.

“As things stand, money markets are pricing in additional 50-bps hike at their June, July and September meetings, before dropping to 25-bps hikes in November and December. So it’s really about confirming whether the markets have the right curvature or not.”

Australia’s high-street banks raised their variable mortgage rates after the Reserve Bank hoicked the cash rate target by 25 basis points yesterday.

“The central bank’s move was clearly more hawkish than expected but appears suitable at a time when consumer prices are going haywire. In a rising interest rate environment, it seems imperative for investors to invest in sectors that could better survive the aggressive policy moves of the central bank,” Kunal Sawhney, chief executive of research group Kalkine, said.

Overnight, US stocks edged higher for a second session. The S&P 500 put on 0.48 per cent.

Winners’ circle

Energy was the pick of the sectors amid scepticism over the European Union’s ability to function without Russian gas and crude. Santos gained 1.13 per cent and Beach Energy 1.54 per cent. Woodside Petroleum faded to a loss of 0.1 per cent

Transurban climbed 1.44 per cent to a ten-month high after reporting a strong pick-up in traffic volumes. Other heavyweights to advance included NAB +1.03 per cent, James Hardie +0.84 per cent and CSL +0.69 per cent.

ANZ firmed 0.44 per cent after reporting a 3 per cent dip in half-year cash profit. Shareholders will receive an interim dividend of 72 cents per share, fully franked.

CEO Shayne Elliott said the bank had invested in a new retail banking platform and built a new retail foreign exchange offering for release later this year. Costs were flat despite inflationary pressures.

Media giants Nine Entertainment and Seven West Media suffered mixed fortunes after upgrading their earnings outlooks. Nine bounced 0.78 per cent on news it expects full-year earnings growth of more than 22 per cent.

Seven West declined 2.29 per cent after raising its forecast to $335-$340 million from previous guidance of $315-$325 million.

Doghouse

JB Hi-Fi fell 4.77 per cent after Covid issues prevented it from issuing full-year guidance. The retailer reported an 11.9 per cent increase in third-quarter sales at its Australian business but said disruption to stock availability and local and global uncertainties meant it was not “appropriate” to provide guidance.

Flight Centre slid 6.65 per cent after forecasting a full-year loss of $195-$225 million. The travel agent said there had been a strong turnaround over the last five months, but margins were tracking below pre-Covid levels.

Zip Co shed 10.82 per cent ahead of the release of millions of shares from voluntary escrow. A poorly-received trading update dragged automotive parts business ARB Corporation down 11.18 per cent.

Aerial mapping group Nearmap faded 2.89 per cent after telling the Macquarie Australia Conference it expects annual contract value to hit the upper end of guidance of $150-$160 million.

AVZ Minerals wilted 19.19 per cent as a legal dispute overshadowed news its flagship Manono lithium and tin project in the Democratic Republic of the Congo moved a step closer to production. The Minister of Mines signed a decree awarding AVZ’s joint venture the licence for the project. However, the miner also reported a legal squabble involving rival claims and the alleged transfer of an interest in the venture to a third party.

Online furniture retailer Temple & Webster fell 7.04 per cent after refining its full-year earnings forecast to the middle of the previously-issued guidance and announcing plans to take on Bunnings in the home improvement space.

Bank of Queensland dropped 2.71 per cent as its shares traded without the right to the latest dividend.

Other markets

A downbeat session on Asian markets saw the Asia Dow drop 0.35 per cent and Hong Kong’s Hang Seng lose 1.16 per cent. Trade in mainland China and Japan was suspended for public holidays.

S&P 500 futures climbed six points or 0.14 per cent.

Oil clawed back some of last night’s 2.4 per cent setback. Brent crude rallied US$1 or 0.95 per cent to US$105.97 a barrel.

Gold reversed overnight gains, falling US$7.60 or 0.4 per cent to US$1,863 an ounce.

The dollar firmed above 71 US cents, rising 0.15 per cent to 71.1 US cents.

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