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The share market suffered its first setback in a week and a half as the dollar slumped and bond yields surged.

The S&P/ASX 200 dropped 26 points or 0.37 per cent by mid-session. The dollar slipped briefly below 69 US cents after giving up more than a cent this week.

Gains in tech stocks were outweighed by declines across the broader market following weak leads from Wall Street.

What’s driving the market

US stocks fell for a second night as hawkish comments from Federal Reserve officials prompted sharp dislocations on bond, equity and forex markets. The greenback and treasury yields soared as traders reassessed the outlook for interest rates.

The S&P 500 dropped 0.67 per cent. The Dow shed a chunkier 1.23 per cent as a weak trading update from global bellwether Caterpillar weighed.

“Wall Street stocks fell on Tuesday amid rising geopolitical tensions between the US and China and a jump in treasury yields,” Kunal Sawhney, chief executive of research group Kalkine, said.

The Australian dollar fell collateral damage to the bounce in the greenback. The Aussie dropped back under 69 US cents before paring its loss, trading lately at 69.24 US cents.

Utilities and consumer stocks led this morning’s ASX retreat as a rally in bond yields dulled interest in equities with similar characteristics to government bonds. The yield on ten-year Australian bonds reversed seven basis points off yesterday’s four-month low.

The ASX more than halved its initial loss as Asian markets recovered from yesterday’s Taiwan tantrum. The Shanghai Composite bounced 0.5 per cent.

The Chinese benchmark skidded 2.26 per cent yesterday as US House Speaker Nancy Pelosi pressed ahead with a visit to Taiwan. China views the self-governing island nation as a rogue province that will one day come under Beijing’s control.

“The first visit by a US Speaker of the House to Taiwan in 25 years sparked a conflict between the two largest economies of the world. China and Taiwan together supply half of the semiconductor chips and most of the latest high-tech chips the world consumes. So, escalation of tension between the two countries could lead to blockages in international trade, a fear that weighed on Wall Street,” Kalkine’s Sawhney said.

Going up

Pinnacle Investment Management jumped 13.01 per cent after increasing its full-year profit and raising its dividend despite “difficult market conditions”. The asset manager’s net profit after tax improved 14 per cent to $76.4 million. Shareholders will receive a fully-franked final dividend of 17.5 cents per share, an increase of 3 per cent.

Expansion plans helped boost rare earths miner Lynas 6.25 per cent. The firm announced a $500 million project to increase capacity at its Mt Weld mine and concentration plant to meet strong demand.

The tech sector shrugged off today’s bounce in the cost of borrowing. Afterpay parent Block firmed 4.57 per cent. Megaport gained 4.99 per cent, BrainChip 4.81 per cent and EML Payments 4.98 per cent. Zip Co advanced 7.38 per cent.

Bunnings landlord BWP Trust put on 1.42 per cent after reporting a 14.1 per cent increase in the value of its property portfolio to $3 billion for the 12 months to June 30. Distributions this year were flat.

Genworth Mortgage Insurance rose 0.35 per cent as the launch of a $100 million share buyback helped offset a 34.9 per cent decline in written premiums across the first half. Underlying net profit jumped 75.8 per cent to $134.3 million.

Just three of the market’s top 20 heavyweights advanced. James Hardie added 1.6 per cent, Goodman Group 0.39 per cent and Telstra 0.25 per cent.

Trade in Orica was suspended while the explosives firm taps investors for funds to acquire mining geospatial tech firm Axis. Orica will pay $260 million upfront with an additional earn-out payment of up to $90 million contingent on performance.

Going down

A further delay in the replacement of the aging CHESS computer system used to manage share transactions helped drive the exchange operator ASX Ltd down 2.71 per cent. The company said more development was required, pushing the go-live date to late 2024 at the earliest.

Lithium miner Pilbara Minerals dipped 0.91 per cent despite news its latest spodumene concentrate auction attracted 67 bids and a price of US$6,350/dmt.

Charter Hall Retail REIT retreated 1.47 per cent after acquiring 18 service stations in New Zealand for $101.7 million.

Among the heavyweights, Wesfarmers fell 1.64 per cent, Newcrest 1.54 per cent and Santos 1.45 per cent. The big four banks lost 0.35-0.95 per cent.

Other markets

US futures edged higher as most Asian markets rose. S&P 500 futures firmed five points or 0.1 per cent.

Hong Kong’s Hang Seng rallied 0.34 per cent. Japan’s Nikkei added 0.57 per cent. The Asia Dow fell 0.42 per cent.

Oil dropped back under US$100 a barrel before a partial recovery. Brent crude was lately down 14 US cents or 0.14 per cent at US$100.42 a barrel.

Gold declined US$9.30 or 0.5 per cent to US$1,780.40 an ounce.

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