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The share market tilted towards a third loss in four sessions after the prospect of elevated interest rates for years to come fuelled selling on Wall Street.

The S&P/ASX 200 declined 27 points or 0.36 per cent by mid-session.

Utilities and tech stocks led the retreat following disappointing trading updates from AGL Energy and Megaport. The healthcare and energy sectors resisted the downtrend.

What’s driving the market

This week’s tentative rates optimism in the US withered overnight as a succession of Federal Reserve officials doused hopes of cuts before this year is out. The S&P 500 sagged 1.11 per cent after New York Fed President John Williams said the central bank would have to keep rates at “restrictive” levels “for a few years to make sure we get inflation to 2%.”

Other Fed officials also warned of a “long fight” in what economist Mohamed A. El-Irian described as a co-ordinated attempt to correct the market’s interpretation of recent remarks by Chair Jerome Powell.

Clifford Bennett, chief economist at ACY Securities, said last night’s action may mark a sea change after a bullish start to the year lifted the S&P 500 more than 9 per cent and the ASX 200 almost 7.5 per cent.  

“We saw very weak attempts at a rally during New York trading, and this is quite unusual given the usual pattern seen over recent weeks,” Bennett said.  

“That change in price action on the day could point to a return of institutional selling of the kind we have not seen so far this year. The bulls have had it all their way, but as the blizzard of recent Fed actions and commentaries begins to clear, it is the bears that are emerging in view.”

Back home, a choppy interim earnings season continued with a major miss from AGL. The energy giant’s shares plunged 10.71 per cent after it reported a first-half loss of $1.075 billion and halved its interim dividend.

Underlying profit slumped 55 per cent to $87 million. Managing Director and CEO Damien Nicks said the result was impacted by plant outages.

“Importantly, as units have returned to service, we’ve seen a significant improvement in portfolio performance at the end of the first half. We expect to have higher earnings in the second half of FY23, in line with guidance, and continued positive momentum into FY24,” Nicks said.

Going up

Charter Hall Long WALE REIT firmed 1.52 per cent after reaffirming guidance following first-half earnings of $101.2 million. The trust reported 99.9 per cent occupancy and a 0.9 per cent increase in property valuations.

An 8.6 per cent increase in first-half net operating profit helped lift Arena REIT 1.08 per cent. The company reaffirmed its full-year distribution guidance.

Agribusiness Elders bounced 4.02 per cent off a two-and-a-half year low after updating investors. The company released a presentation to reassure shareholders after the share price plunged in the wake of institutional briefings this week.

Santos climbed 0.57 per cent after announcing production has resumed at the John Brookes platform off the coast of WA. Operations were suspended in November to fix a leak in a pipeline connecting the platform to gas processing facilities on Varanus Island.

Fortescue Metals was the pick of the rest of the market heavyweights, rising 1.2 per cent. Woodside Energy firmed 1.07 per cent, ANZ 0.74 per cent and CSL 0.48 per cent.

Going down

Megaport slumped 6.62 per cent after reporting significant cash burn while it narrowed its first-half net loss. The tech firm cut its net loss by 37 per cent to US$9.2 million from US$14.6 million in 1H22. The closing cash balance at the end of the half was AUD$57.3 million, down from AUD$104.6 million at the end of the prior corresponding period.

Elsewhere in the tech sector, Block dropped 2.44 per cent, Xero 2.67 per cent and Nextdc 2.31 per cent.

Mesoblast hit a multi-year high before fading 2.51 per cent after the US Food and Drug Administration granted fast-track status to the firm’s treatment for lower back pain. The FDA’s Office of Tissues and Advanced Therapies granted Regenerative Medicine Advanced Therapy designation to rexlemestrocel-L. The designation is reserved to help expedite the development of the treatments for unmet medical needs.

Mirvac eased 2.29 per cent after first-half statutory profit more than halved to $215 million from $565 million in 1H22. The company said the decline was primarily due to lower investment property revaluations.

Coal miners retreated after a 6.38 per cent slump in prices out of Newcastle yesterday. Coronado shed 4.88 per cent, Whitehaven 4.86 per cent and New Hope 4.01 per cent.

Other markets

A red session on Asian markets saw the Asia Dow lose 0.09 per cent, China’s Shanghai Composite 0.14 per cent, Hong Kong’s Hang Seng 0.61 per cent and Japan’s Nikkei 0.33 per cent.

US futures firmed after a well-received after-hours trading update from Disney. S&P 500 futures climbed 7.5 points or 0.18 per cent.

Gold trimmed three days of gains, easing US$4.40 or 0.23 per cent to US$1,886.30 an ounce.

Brent crude dipped six US cents or 0.07 per cent to US$85.03 a barrel.

The dollar bounced 0.11 per cent to 69.36 US cents.

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