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The Australian share market fell to its lowest in two weeks after a global retreat from risk lowered commodity prices and US equities.

The S&P/ASX 200 finished 31 points or 0.42 per cent in the red at 7454 after trading as low as 7431.

All 11 sectors declined, mirroring broad weakness on Wall Street overnight. Growth stocks copped heavy treatment as interest rates tested multi-year highs. Energy stocks sagged as crude dropped briefly below US$100 a barrel.

What moved the market

Aussie shares retreated as US futures fell ahead of tonight’s March inflation data. S&P 500 futures slid 18 points or 0.4 per cent in a sign investors anticipate another red-hot report.

The fall continued a week-long downtrend in risk assets since the Federal Reserve mapped out plans to hike rates in 50 basis-point jumps this year and run down its balance sheet quicker than the market initially expected.

Bond markets have fallen for seven straight sessions, sending the cost of borrowing sharply higher. (Prices and yields move inversely.) The ten-year US yield hit a three-year peak overnight. The ten-year Australian yield climbed six basis points this afternoon to 3.086 per cent, a level last seen in 2015.

“Bond yields continued to rise overnight and dampen appetite for equities as traders increasingly expected a 50-bps hike at next month’s [Federal Open Market Committee] meeting. Fed fund futures are now pricing in an 82.1% chance of a 50-bps hike, which saw the Nasdaq lead the way lower,” City Index senior market analyst Matt Simpson said.

The rise in borrowing costs has hit growth stocks particularly hard. Overnight, the Nasdaq Composite fell 2.18 per cent. The decline extended the growth-heavy index’s fall from its peak beyond 17 per cent. Here, the ASX tech sector fell for a fifth day.

Inflationary pressures have yet to dent business conditions and confidence, according to NAB’s March survey. Business conditions jumped nine points to +18, the biggest improvement since June 2020. Profitability increased eight points to +13. Confidence improved three points to +16.

“Businesses reported very strong trading conditions and a sharp rise in profitability, which indicates demand is continuing to hold up as the economy rebounds from Omicron and growth gathers momentum,” NAB Group Chief Economist Alan Oster said.

Consumers were less confident about the outlook. The ANZ-Roy Morgan confidence index rose 1.3 per cent last week to 94.6, well below the 100-point level where optimists start to outnumber pessimists.

Winners’ circle

Havens were at a premium as the sinking tide lowered most boats. Just one company on the ASX 20 index of market behemoths gained more than 1 per cent. James Hardie put on 2.24 per cent. Macquarie Group edged up 0.6 per cent, Rio Tinto 0.5 per cent, Transurban 0.15 per cent and BHP 0.08 per cent.

Gold miners offered a sanctuary as a rally in the yellow metal entered a fourth day. Regis Resources rose 4.74 per cent, St Barbara 2.81 per cent and Ramelius 2.51 per cent.  

Outside of the gold space, the ASX 200’s best performers were Elders +2.85 per cent, Uniti Group +2.56 per cent and BlueScope Steel +2.51 per cent.

Iress climbed 1.72 per cent after scrapping plans to divest its UK mortgages business. The company said valuations for the business had been impacted by market volatility and changed perceptions of the worth of tech businesses as rates rise.

Doghouse

Growth stocks whose valuations depend more on expectations for future earnings than current earnings once again suffered most. Imugene dived 8.7 per cent, Zip Co 5.71 per cent and Novonix 5.45 per cent.

Block dropped 0.41 per cent as a surge in bad debts outweighed increased revenue at Afterpay over the last half. Afterpay reported an after-tax loss of $345.5 million, up from $79.2 million in the previous six months. Bad debts more than doubled to $176.8 million

Retailer City Chic Collective fell 7.96 per cent to a two-year low. Vitamin-maker Blackmores lost 4.29 per cent.

Energy producers declined after Brent crude settled below US$100 a barrel for the first time in almost a month. Santos shed 0.87 per cent. Woodside Petroleum finished flat as crude rebounded.

Pendal retreated 0.19 per cent after rejecting a takeover offer from rival Perpetual and launching a $100 million share buyback. The fund manager’s board said Perpetual’s non-binding offer undervalued the company and was not in the best interests of shareholders.

An on-market share buyback was the most efficient way to “deliver an earnings per share accretive return of capital”. Perpetual shares lost 0.4 per cent.

The high-street banks fell between 0.06 and 1 per cent. Wesfarmers dropped 1.01 per cent, CSL 1.32 per cent and Goodman 1.29 per cent.

G8 Education eased 2.3 per cent after Omicron knocked a hole in first-quarter profits. The childcare provider’s revenues, occupancy and staffing costs were all impacted by centre closures and isolation requirements. Operating profit declined to $1 million from $17 million over the same period last year.

Pilbara Minerals dipped 5.84 per cent after warning Covid issues could affect production forecasts for this quarter. First-quarter production fell within guidance at 81,431 dry metric tonnes of spodumene concentrate. The average sales price was towards the lower end of guidance.

A record quarter failed to cushion rare earths miner Lynas. The share price dropped 1.42 per cent after the company reported quarterly sales revenue of $327.7 million, more than 50 per cent higher than the prior corresponding period.  

Seven Group dropped 1.15 per cent as its shares traded without the right to a dividend.

Other markets

Asian markets turned mixed in afternoon trade. China’s Shanghai Composite reversed to a gain of 0.94 per cent. Hong Kong’s Hang Seng put on 0.24 per cent. The Asia Dow lost 0.95 per cent and Japan’s Nikkei 1.83 per cent.

Brent crude bounced US$2.19 or 2.2 per cent this afternoon to US$100.71 a barrel.

Gold climbed US$12.20 or 0.6 per cent to US$1,960.30 an ounce.

The dollar bounced 0.25 per cent to 74.33 US cents.

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