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Tech stocks led a retreat as the ASX surrendered its hold on record levels following overnight weakness on Wall Street.

The S&P/ASX 200 dropped 82 points or 1.14 per cent from last night’s all-time closing high.

What’s driving the market

The technology sector sank more than 4 per cent to its weakest level in nine weeks after the Nasdaq Composite led selling in the US. The tech-heavy US benchmark dived 2.55 per cent overnight as traders rotated out of Apple, Microsoft, Facebook and other big winners from the pandemic.

While surging commodity prices have lifted the ASX and US materials sectors to all-time highs, tech and other rate-sensitive sectors have come under renewed pressure amid concerns about the implications for inflation.

“Another rise in US inflation expectations has been the main theme from the overnight price action,” NAB Currency Strategist Rodrigo Catril said. “Tech stocks have borne the brunt of it with the NASDAQ leading the decline within US equity indices amid a clear switch towards value stocks.

“The rise in inflation expectations along with higher nominal yields means growth stocks with higher earnings/cashflows projected out in the future now need to be discounted at a higher rate,” he added.  

The morning’s biggest losers in the tech space included aerial mapping group Nearmap, down 7.4 per cent and BNPL leader Afterpay, down 7.68 per cent. WiseTech dropped 3.96 per cent, Appen 4.47 per cent and Xero 4.14 per cent. Altium slumped 3.09 per cent to a 13-month low.

Nasdaq futures spiralled lower this morning, falling 142 points or 1.07 per cent. S&P 500 futures dived 27 points or 0.65 per cent.

Asian markets also suffered heavy losses. The Asia Dow dropped 2.08 per cent as Japan’s Nikkei shed 2.74 per cent and Hong Kong’s Hang Seng lost 2.3 per cent. China’s Shanghai Composite eased 1.14 per cent.

This week’s parabolic rise in iron ore lifted the ASX to record levels but left the mining giants vulnerable to profit-taking. China’s Dalian Commodity Exchange raised trading limits and margin requirements yesterday in a bid to cool speculative mania after the price of ore jumped almost $40 in three sessions.  

Fortescue Metals eased 3.15 per cent after Bell Porter cut its rating on the stock to ‘Hold’. Rio Tinto retreated 2.89 per cent from yesterday’s record. BHP fell 1.34 per cent.

The US materials sector hit an all-time high overnight before closing 0.41 per cent lower. The S&P 500 declined 1.04 per cent. The blue chips of the Dow fared better, easing a slim 0.1 per cent.

Going up

Utilities and consumer staples were the only sectors to advance during a “risk off” session. Woolworths gained 1.09 per cent, Coles 0.62 per cent, AusNet 0.53 per cent, APA Group 0.15 per cent and AGL Energy 0.11 per cent.  

Besides the supermarkets, Brambles was the only other component of the ASX 20 index of heavyweights to advance, rising 0.09 per cent.

Litigation funder Omni Bridgeway was among the morning’s best performers, rising for a second day after securing $94 million from a class action. The share price rallied 1.34 per cent.  

Construction materials manufacturer Boral hit a two-and-a-half-year peak following a takeover offer from Seven Group. The share price rose as high as $6.73 before retreating towards the offer price of $6.50 per share. Shares were lately up 1.23 per cent at $6.59. Boral recommended shareholders reject the offer, which it described as opportunistic and undervaluing the company. Seven Group shares fell 2.46 per cent.

Going down

While tech bore the brunt of the selling, gold miners were close behind as the yellow metal trimmed a fourth straight advance. Westgold Resources shed 5.79 per cent, Perseus 4.83 per cent, Ramelius 3.77 per cent and Newcrest 1.49 per cent.

Westpac led a retreat in the big four banks, falling 1.29 per cent. CBA gave up 0.47 per cent, NAB 0.59 per cent and ANZ 1.04 per cent.

The speculative and smaller ends of the market have underperformed the top end this week, failing to follow the ASX 20 to fresh heights. The S&P/ASX Emerging Companies index sank 2.35 per cent this session. The Small Ords fell 2.16 per cent.

China-dependent infant formula exporters plumbed new multi-year lows following yesterday’s downgrade from A2 Milk. A2 shares sank 5.66 per cent to their lowest level since 2017. Bubs Australia dropped 2.9 per cent, also a three-and-a-half-year low.  

Other markets

Oil joined a general retreat from risk assets. Brent crude declined 44 cents or 0.64 per cent to US$67.88 a barrel.

Gold dipped 60 cents or 0.03 per cent to US$1,837 an ounce.

The dollar inched up 0.02 per cent to 78.41 US cents.

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