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A week-long rally soured with the share market’s heaviest loss in two months as investors took profits ahead of the long weekend.

The S&P/ASX 200 slumped 119.5 points or 1.57 per cent to its first loss in six sessions. The reversal pushed the index underwater for the week.

Mining and tech stocks led a sharp retreat in the wake of overnight weakness on Wall Street. Traders took to the sidelines before Monday’s Anzac Day market holiday. Healthcare was the only sector to advance.

What moved the market

A five-session win streak flamed out in convincing fashion as a fresh rates panic kept the pressure on US equity futures. With Wall Street set to trade twice before the ASX reopens on Tuesday, trading turned defensive.

US stocks stumbled overnight after the Federal Reserve warned of difficult days ahead. Chair Jerome Powell said containing inflation without triggering a recession would be “very challenging”.

“Treasury yields jumped as investors braced for the possibility of an aggressive monetary policy tightening by the Fed as soon as next month. Fed Chairman recently warned of a 50-basis point interest rate hike in May, pulling down the strings of the US stocks. The hawkish remarks from the central bank weighed on initial optimism in the equity market, arising from corporate earnings and strong jobless data,” Kalkine Group CEO Kunal Sawhney said.

The S&P 500 swung from a gain of more than 1 per cent to a loss of 66 points or 1.48 per cent. The Dow Jones Industrial Average fell 368 points or 1.05 per cent. The Nasdaq Composite shed 278 points or 2.07 per cent.  

Negative US futures this afternoon discouraged Australian traders from holding their positions. S&P 500 futures declined seven points or 0.15 per cent. Dow futures shed 0.2 per cent. Nasdaq futures lost 0.1 per cent.

Today’s loss was the ASX 200’s heaviest since a 215-point plunge on February 24. The reversal flipped the benchmark’s 69-point gain for the week into a loss of 50 points or almost 0.7 per cent. The setback brought an end to a rally across the Easter break that had lifted the index nearly 140 points in five sessions.

Attention will swing next week to the outlook for domestic inflation with the release of quarterly consumer price data on Wednesday. A strong reading would augment the case for rate hikes.

“Investors are eagerly waiting for the March quarter CPI data due next week, especially after NZ inflation hit a 30-year high during the same period. Australia’s first-quarter CPI reading is more likely to remain strong following a continued increase in price growth,” Kalkine’s Sawhney said.

“Financial markets are pricing in the first interest rate hike in over a decade after the federal election. At a time when financial markets are gearing up for the RBA’s inflation-fighting efforts, it is hard to neglect the possibility of an economic contraction emerging from aggressive interest rate hikes.”

Winners’ circle

Just eight of the benchmark’s 200 component companies gained more than 1 per cent as the chill wind blowing from the US pushed traders towards defensive assets.

Dan Murphy’s and BWS owner Endeavour Drinks rebounded 1.71 per cent from yesterday’s trading update. Takeover target Ramsay Health Care added1.66 per cent.

CSL made a rare appearance near the top of the table with a rise of 1.45 per cent. Domain Holdings put on 1.42 per cent, JB Hi-Fi 1.15 per cent and GrainCorp 1.1 per cent.

Select property stocks drew a bid. SCA Property Group added 1.31 per cent, Goodman 1.07 per cent and Charter Hall Retail 0.92 per cent.   

At the speculative end of the market, Way2VAT soared 72.73 per cent after launching a debit card that claims to automate GST returns for small and medium businesses. However, Australian businesses will have to wait: the initial rollout will take place in Europe.

Doghouse

Mining giant BHP was a major drag as Australian investors played catch-up with last night’s negative reaction on overseas markets to yesterday’s production downgrades. The Big Australian sank 4.36 per cent to a four-week low.

Megaport added to sharp losses yesterday that followed news costs increased last quarter while growth appeared to slow. The cloud computing firm fell another 9.69 per cent to a two-year low.

Uranium miners sank in the wake of sharp losses among US peers. Paladin Energy shed 8.33 per cent, Buru Energy 6.38 per cent and Bannerman Energy 6.25 per cent.  

The quarterly reporting season rolled on with updates from OZ Minerals, Mineral Resources and Telix Pharmaceuticals. OZ Minerals slid 6.33 per cent after confirming Covid workforce issues dented copper and gold production across the first three months of the year. The miner insisted it remained on track to reach full-year production guidance.

Lithium and iron ore miner Mineral Resources eased 2.18 per cent despite reaffirming production guidance after increasing output by 16 per cent last quarter.

Telix Pharmaceuticals hopes to launch its prostate cancer imaging agent in Australia this quarter following its approval for commercial release in the US. The firm said launch preparations were on track. The share price dipped 3.48 per cent.

Other markets

A broadly negative session on Asian markets saw the Asia Dow lose 1.07 per cent, Hong Kong’s Hang Seng 0.09 per cent and Japan’s Nikkei 1.54 per cent. China’s Shanghai Composite firmed 0.5 per cent.

Oil gave back most of its 1.4 per cent overnight gain. Brent crude fell US$1.35 or 1.25 per cent to US$106.61 a barrel.

Gold bounced US$5.60 or 0.3 per cent to US$1,953.80 an ounce.

The dollar added to overnight losses, falling 0.34 per cent to 73.35 US cents.

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