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The share market slumped towards a second straight loss as a rebound in tech stocks from seven-month lows was outweighed by declines in most of the banks and miners.
A day after its worst setback since February, the S&P/ASX 200 skidded 47 points or 0.66 per cent. Today’s decline extended the index’s two-day loss to 123 points.
What’s driving the market
A rebound in tech stocks proved no match for down-pressure from the index heavyweights. While dip-buyers picked up some of the biggest losers of the last month’s trading action, three of the big four banks and three of the four largest miners declined.
Beaten-up BNPL players Afterpay and Z1p Co bounced 3.26 and 2.22 per cent, respectively. Infant formula maker A2 Milk rallied 1.93 per cent from its lowest level in three and a half years. Aerial mapping group Nearmap reversed 7.57 per cent from yesterday’s 11-month nadir.
Commonwealth Bank edged up 0.32 per cent after announcing profits doubled last quarter as the economy improved. Increases in home loans and business lending helped lift statutory net profit from $1.2 billion over the first three months of last year to $2.4 billion this year.
World equity markets have wilted this week as a surge in commodity prices resurrected inflation jitters. Record high iron ore and copper prices point to producer price pressures that will inevitably be passed on to consumers. US stocks stumbled again overnight as record job vacancies signalled pressure on employers to raise wages to attract employees.
“Inflation alarm bells are ringing louder as sky-high commodity prices, the government’s unprecedented stimulus, and labour shortages in the US market continue to strengthen the wave of price anxiety,” Kalkine Group CEO Kunal Sawhney said. “Speculation over a surge in inflation pressure shook global equities on Tuesday, fuelling possibilities of prompt interest rate hikes in the near future.”
The Dow Jones Industrial Average sank 474 points or 1.36 per cent to its heaviest loss since February. The S&P 500 shed 0.87 per cent. The Nasdaq Composite reversed most of an initial 2.2 per cent fall to end 0.09 per cent lower.
US futures continued to trend lower this morning. S&P 500 futures declined 11 points or 0.28 per cent. Nasdaq futures fell 47 points or 0.35 per cent.
Going up
Technology was the only one of the eleven sectors to advance, rising 2.25 per cent off yesterday’s seven-month closing low. The sector, one of last year’s best performers, has lost almost a quarter of its value since February due in part to fund managers discounting future earnings to reflect a likely rise in borrowing costs.
The ‘WAAAX’ group of sector leaders all advanced. WiseTech gained 0.74 per cent, Appen 1.52 per cent, Afterpay 3.26 per cent, Altium 0.53 per cent and Xero 3.48 per cent.
A 17 per cent lift in full-year net profit to $146.1 million boosted building materials manufacturer CSR 8.97 per cent to its strongest level since 2008. The company declared a final dividend of 14.5 cents.
At the heavyweight end of the index, Brambles climbed 1.37 per cent and Aristocrat Leisure gained 0.45 per cent. Fortescue Metals stood alone among the major miners with a rise of 0.35 per cent. Telstra inched up 0.14 per cent.
Trade in online automotive marketplace carsales.com was suspended while the company raises $600 million to buy a 49 per cent stake in US marketplace Trader Interactive. The purchase will expand the company’s US footprint. The company has a call option to acquire the rest of the US firm.
Going down
The utilities sector sank 1.58 per cent as a 2.7 per cent decline in revenue took some of the shine off AusNet Services’ full-year result. Shares in the electricity transmission network sank 6.38 per cent despite a 3.9 per cent lift in net profit to $302 million. The company will pay a dividend of 9.5 cents per share.
REITs dropped 1.6 per cent after the yield on ten-year Australian government bonds jumped six basis points. Cromwell Property shed 2.79 per cent, Dexus 3.07 per cent and Goodman Group 1.57 per cent.
Westpac led the banks lower, falling 1.34 per cent. ANZ gave up 0.79 per cent and NAB 1.16 per cent. BHP fell 0.84 per cent and Rio Tinto 0.94 per cent. Newcrest shed 1 per cent.
Other notable heavyweight declines included Woodside -1.16 per cent, Transurban -0.98 per cent, Wesfarmers -0.65 per cent and CSL -0.13 per cent.
Travel and tourism stocks faded for a second day. Sydney Airport slid 4.46 per cent, Qantas 3.43 per cent, Flight Centre 4.14 per cent and Webjet 2.21 per cent.
Other markets
Asian markets were mixed but mostly lower. The Asia Dow sank 1.07 per cent. Japan’s Nikkei dropped 0.62 per cent. China’s Shanghai Composite put on 0.16 per cent. Hong Kong’s Hang Seng added 0.37 per cent.
Oil added to slender overnight gains. Brent crude rose seven cents or 0.1 per cent to US$68.62 a barrel.
Gold declined $7.70 or 0.42 per cent to US$1,828.40 an ounce.
The dollar retreated 0.34 per cent to 78.11 US cents.
