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The share market’s head-spinning run of reversals extended to an eighth session following sharp declines in US growth stocks as bond yields spiked.
The S&P/ASX 200 trimmed an opening plunge of 102 points to 57 points or 0.84 per cent by mid-session. The index has switched direction each day since February 23, failing to string together two advances since the middle of last month.
What’s driving the market
The spectre of inflation put the cat amongst the pigeons overnight. The Nasdaq Composite tumbled 2.7 per cent after US bond yields once again threatened to break above 1.5 per cent. The broader S&P 500 shed 1.31 per cent. The Dow lost a more modest 0.39 per cent as select cyclical stocks resisted the down-pressure.
“Equities got hit with the inflation stick Wednesday as technology shares felt the bond market vigilantes’ wrath after another spike towards 1.5% in US 10-year bond yields,” Stephen Innes, Chief Global Market Strategist at Axi, said. “The sell-off in global fixed income markets is revving up again, spilling over to unseat equities and other relatively heavily positioned risk-sensitive assets.
“Until a clear top lid gets put on bond yields, rate jitters amid higher volatility are going to be the order of the day,” he added.
Declines on the ASX broadly mirrored Wall Street, where cyclical stocks outperformed growth counterparts. Sector moves here were distorted by the number of index heavyweights trading without their dividends.
Four market behemoths went ex-dividend: BHP -3.2 per cent, Rio Tinto -5.4 per cent, CSL -3.7 per cent and Woolworths -3.2 per cent. ASX -2.3 per cent and Nine Entertainment -2.1 per cent also traded without their dividends. Tentative gains in bank stocks cushioned the market from a deeper loss.
On the economic front, the trade balance increased to $10.142 billion in January as a 6 per cent increase in exports outstripped a 2 per cent decline in imports. Retail sales increased 0.5 per cent, just short of forecast.
Going up
Just six of the 20 largest listed companies by market capitalisation advanced. The big four banks, which benefit from margin opportunities with higher rates, improved as the morning wore on. ANZ added 2.9 per cent, NAB 2 per cent, CBA 0.7 per cent and Westpac 0.8 per cent. Macquarie Group edged up 0.2 per cent. Aristocrat Leisure, which depends heavily on US earnings, rallied 2.2 per cent following overnight gains in the US dollar.
Car accessory retailer ARB Corporation advanced 3 per cent after acquiring UK manufacturer Truckman for GBP 21.9 million. Truckman manufactures accessories for utes, including canopies and bed liners.
Insurer QBE climbed 2.9 per cent after announcing Andrew Horton as its new Group CEO, replacing Richard Pryce. Horton is currently CEO of UK insurer Beazley.
Diversified miner South32 claimed a 52-week high for a second day, rising 0.9 per cent.
Going down
Besides firms trading without their dividends, the biggest drags this morning were miners Newcrest -2.8 per cent and Fortescue -3.7 per cent.
Also under pressure: bond surrogates that shine when yields are low. Transurban fell 2.2 per cent, Wesfarmers 1.8 per cent and Coles 1.8 per cent. Telstra shed 0.8 per cent and Goodman Group 0.4 per cent.
Tech stocks followed the Nasdaq lower. Bravura Solutions shed 3.3 per cent, Appen 3.1 per cent, Nearmap2.5 per cent and WiseTech 2.1 per cent.
Xero shed 2.6 per cent after announcing the acquisition of Danish workforce management platform Planday for an upfront payment of 155.7 million euros and an earnout of 27.8 million.
A 13.1 per cent dive in half-year sales helped drag department store Myer down 9.9 per cent. Foot traffic was hit by pandemic closures and a shift to online shopping. Statutory net profit jumped 76.3 per cent to $43 million.
Synlait Milk slumped 8.6 per cent to a four-year low after scrapping its full-year guidance. The company is a major supplier to A2 Milk, which has seen demand destruction from the collapse of its diagou reseller channels. Shares in A2 eased 0.5 per cent.
Other markets
Asian markets took their cues from the US. The Asia Dow shed 1.6 per cent. China’s Shanghai Composite gave up 0.85 per cent, Hong Kong’s Hang Seng 1.19 per cent and Japan’s Nikkei 1.56 per cent.
US futures wallowed in the red. S&P 500 futures declined nine points or 0.2 per cent. Nasdaq futures fell 46 points or almost 0.4 per cent.
Oil trimmed an overnight rebound ahead of tonight’s OPEC+ meeting of oil ministers. Brent crude eased five cents or 0.1 per cent to $US64.02 a barrel.
Gold‘s slide continued. The yellow metal fell $2.70 or almost 0.2 per cent to $US1,713.10 an ounce.
The dollar bounced 0.36 per cent to 77.81 US cents.
