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Tech stocks slumped to an eight-week low as turmoil on Wall Street and caution ahead of a potential rate rise tomorrow fuelled a sharp share market retreat.

The S&P/ASX 200 declined 88 points or 1.18 per cent. The tech sector shed almost 4 per cent.

All 11 sectors declined following Wall Street’s worst session since 2020. Growth and property stocks led the retreat. Travel stocks resisted the slide amid early signs of a return to profitability.

What moved the market

A potentially momentous week of central bank action began on a sour note as investors reacted to blood-letting in the US on Friday. The S&P 500 dropped 3.63 per cent after poorly-received trading updates from Amazon, Apple and Intel. The tech-heavy Nasdaq Composite shed 4.17 per cent as it wrapped up its worst month in more than a decade.

Soft Chinese factory data over the weekend did little for the market mood. The purchasing managers’ index fell to 47.4 last month from 49.5 in March as Covid lockdowns impacted production. Readings below 50 indicate contracting activity. Services-sector activity was also weak.

“A sharp Chinese economic slowdown in the second quarter remains a realistic outcome at this stage and if history is any guide, global hit to growth would follow shortly after,” NAB currency strategist Rodrigo Catril said.

The ASX 200 unwound Friday’s gains, plus a bit more. The index traded as low as 7301.6 before paring its loss, closing at 7347.

The week ahead will be dominated by interest rate decisions. The Reserve Bank meets tomorrow and the US Federal Reserve on Wednesday. While the Fed is seen as certain to raise its target rate by at least 50 basis points, tomorrow’s Australian rate call is a nail-biter.

The median consensus among economists is for an increase to the cash rate of 15 basis points. But not all are convinced. Former RBA economist Paul Bloxham today told the Australian Financial Review he thinks the central bank will hold off.  

“They’ve given fairly clear guidance that they need to see the wages numbers before they move the cash rate,” he said.

Winners’ circle

Qantas put on 2.86 per cent after projecting a return to profit next financial year and unveiling plans for direct flights to London and New York. The airline expects domestic earnings to be positive this quarter, paving the way to profitability in FY23 as international travel recovers. The company also announced it will buy 12 Airbus A350s capable of flying direct to western Europe and the eastern US.

Helloworld Travel firmed 2.63 per cent on news revenues bounced 52 per cent last quarter from the same period last year. The recovery helped the travel agent more than halve its loss to $1.9 million.

Rivals Flight Centre and Webjet responded with rises of 1.77 and 1.16 per cent, respectively.

Aside from travel companies, just five stocks on the ASX 200 gained more than 1 per cent. PointsBet put on 5.67 per cent, Chalice Mining 2.16 per cent, Reliance Worldwide 1.77 per cent, Cromwell Property 1.75 per cent and Beach Energy 1.23 per cent.

Toll road operator Transurban firmed 0.49 per cent after reporting a sharp up-tick in traffic volumes across Easter. The company told today’s Investor Day that private transport usage had recovered close to pre-pandemic levels.

Mining investor Deterra edged up 0.21 per cent after royalty receipts increased 78.8 per cent last quarter to $59.1 million. Centuria Office REIT gained 1.36 per cent after reaffirming full-year guidance.

Doghouse

Rate-sensitive growth stocks led today’s sell-off, mirroring Friday’s US action. Imugene sank 13.64 per cent, Pro Medicus 7.81 per cent and WiseTech 7.29 per cent. Telix Pharmaceutical gave up 6.72 per cent, Xero 6.59 per cent and Tyro Payments 5.58 per cent.

Industrial landlord Goodman sank 7.17 per cent after Amazon – a major client – reported an unexpected quarterly loss. The decline came amid wider pressure on property stocks as Morgan Stanley highlighted potential issues for under-hedged real estate investment trusts as interest rates increase.

Aussie Broadband dived 28.06 per cent as investors baulked at updated guidance. The telco expects active broadband connections to reach 580,000-585,000 by financial year-end. Earnings are expected to be $27-$28 million.

An earnings downgrade pushed AGL down 0.69 per cent following a generator fault at the Loy Yang power station in Victoria. The company downgraded full-year underlying earnings guidance to $1.23-$1.3 billion from a previous forecast of $1.275-$1.4 billion.

NAB was worst of the major banks, falling 0.95 per cent after entering an enforceable undertaking with AUSTRAC to improve compliance with anti-money laundering and terrorism financing laws. The undertaking requires the bank to formulate a remedial plan and address any deficiencies identified by the regulator.

Liontown Resources announced the completion of a lithium offtake agreement with LG Energy Solution. Shares in the miner eased 2.05 per cent.

Other markets

The Asia Dow fell 0.71 per cent. Japan’s Nikkei swung to a gain of 0.1 per cent. Trade in mainland China and Hong Kong was suspended for public holidays.

S&P 500 futures bounced 12 points or 0.3 per cent. Nasdaq futures rallied 0.43 per cent.

Gold began a new week on the back foot. The yellow metal skidded US$25.60 or 1.34 per cent to US$1,886.10 an ounce.

Oil also hit reverse. Brent crude declined 95 US cents or 0.9 per cent to US$106.19 a barrel.

The dollar receded 0.22 per cent to 70.43 US cents.

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