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Healthcare and tech led a sharp retreat on the share market after inflation and recession worries dragged Wall Street lower.

The S&P/ASX 200 fell 73 points or 1 per cent by the halfway mark. The decline pulled the benchmark back under 7200 for the first time in four sessions.

Nine of eleven sectors declined, led by technology, healthcare and industrials. Utilities, gold miners and oil producers resisted the selling.

What’s driving the market

US stocks fell for a second night after upbeat economic data suggested rates will have to go much higher to contain inflation. The prospect sharpened concerns the US risks a recession as rates crimp growth.

“US equities started the new month on the back foot with solid economic news unsettling investors,” NAB currency strategist Rodrigo Catril said. “The US ISM beat expectations and the JOLTS report reaffirmed tightness of US labour market, the solid data releases supported the notion of a hawkish Fed.”

The S&P 500 dropped 0.75 per cent in choppy trade. The Dow finished 177 points or 0.54 per cent lower after being up as much as 280 points and down 400 points.

Canada’s central bank raised its benchmark rate and signalled there was more to come. The cash rate rose to 1.5 per cent.

“The idea that Central Banks will need to step up their pace of tightening given a backdrop of solid activity, high inflation and tight labour markets was further reinforced overnight after the Bank of Canada delivered a 50bps hike and a very hawkish forward guidance,” Catril added.

JPMorgan’s chief executive Jamie Dimon threw fuel on the fire by suggesting the US economy faced a “hurricane” as the Federal Reserve reduces its balance sheet, a process known as quantitative tightening.

“You better brace yourself,” he told a financial conference. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

Nothing in the morning’s domestic economic data suggested a hurricane was imminent. The trade surplus expanded as exports increased and imports declined. The surplus increased more than expected to $10.496 billion in April.

Going up

Woodside Energy jumped 5.2 per cent after clearing a stock overhang. JPMorgan sold $1.1 billion worth of Woodside shares in a block trade overnight for investors who were ineligible to take up their share from the demerger of BHP’s petroleum assets. The sale removed the prospect of weeks of steady selling pressure.

Beach Energy climbed 1.58 per cent to a near two-month high. Santos firmed 0.79 per cent.

Gold miners provided some of the morning’s gains as traders bought traditional havens. Sandfire added 1.47 per cent, Silver Lake Resources 0.83 per cent and Regis Resources 0.79 per cent. Newcrest inched up 0.04 per cent.

Battery metal miners were mixed as the tremors subsided after Goldman Sachs called time on the bull market in green metals. Lithium miner Liontown Resources bounced 3.93 per cent. Nickel producer IGO rallied 3.94 per cent.

Pilbara Minerals was unchanged. The miner announced Chief Operating Officer Dale Henderson will step into the CEO and Managing Director’s role when Ken Brinsden steps down. Allkem dropped 0.43 per cent. Piedmont Lithium shed 9 per cent. Mineral Resources gave up 2.78 per cent.

A tweet from Joe Biden helped Bubs Australia bounce 8.55 per cent. The US President tweeted that 4.6 million bottles of Bubs’ infant formula would soon be on its way to help with a shortage in the US. Bubs said shipments would start on June 9.

Going down

Growth stocks were back in the firing line as Australian government bond yields rose for a third session. Rising yields are a headwind for growth companies whose valuations depend heavily on the outlook for future earnings.

Life360 retreated 5.85 per cent. Nanosonics shed 5.68 per cent, Polynovo 5.02 per cent and Afterpay parent Block 4.35 per cent.

Wesfarmers eased 0.63 per cent after warning near-term earnings at its new healthcare acquisitions will be impacted by integration and investment costs. The retail conglomerate recently acquired Australian Pharmaceutical Industries, operator of the Priceline brand. The industrial and safety division faced headwinds from Covid disruptions and inflation.  

The exchange operator, ASX Limited, dropped 1.67 per cent after announcing Helen Lofthouse will replace Dominic Stevens as CEO and Managing Director. Stevens will stand down on August 1. Lofthouse is currently the firm’s executive for markets.

A tough morning for health stocks saw Pro Medicus slip 0.19 per cent despite announcing a seven-year deal worth $28 million with a US not-for-profit healthcare provider. The Australian health imaging firm’s US subsidiary will service Allina Health, which operates 11 hospitals and 90 clinics in the mid-west.

Healius declined 3.06 per cent. Sonic Healthcare lost 2.27 per cent and CSL 2.02 per cent.

Other markets

Asian markets tracked Wall Street lower. The Asia Dow shed 1.14 per cent. China’s Shanghai Composite gave up 0.1 per cent, Hong Kong’s Hang Seng 1.38 per cent and Japan’s Nikkei 0.22 per cent.

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

Oil retreated ahead of tonight’s OPEC+ meeting. Brent crude declined US$2.50 or 2.15 per cent to US$113.79 a barrel.

Gold softened US$1.10 or 0.05 per cent to US$1,847.70 an ounce.

The dollar eased 0.06 per cent to 71.67 US cents.

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