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The share market backed off an eight-month high after a sharp reversal on Wall Street stoked risk aversion ahead of the long weekend.  

The S&P/ASX 200 skidded 124 points or 1.63 per cent by mid-session. The decline ended a five-session winning run that lifted the benchmark yesterday to its highest since August.

Mining and tech stocks led the retreat. Ten of eleven sectors declined. CSL and Ramsay steered the defensive healthcare sector higher.

What’s driving the market

Sharp falls in the US prompted investors to reduce their exposure ahead of Monday’s Anzac Day market holiday. Wall Street is set to trade twice before the ASX reopens on Tuesday.

Overnight, US stocks reversed early gains after the Federal Reserve signalled its intent to move quickly” and raise its target rate by 50 basis points next month. Traders appeared spooked by an acknowledgement from Chair Jerome Powell that containing inflation without triggering a recession would be “very challenging”.

The S&P 500 swung from a gain of more than 1 per cent to a loss of 66 points or 1.48 per cent. The Dow Jones Industrial Average fell 368 points or 1.05 per cent. The Nasdaq Composite shed 278 points or 2.07 per cent.

The reversal cruelled the ASX’s week-long push towards record territory. The benchmark rallied on Wednesday to within eight points of last year’s all-time high.  

While the Reserve Bank has yet to follow the path of other major central banks, the cash rate is expected to go up in June once the federal election is done and dusted.

“The Australian share market seems to be replicating the trend seen on Wall Street last night, potentially surrendering to rate hike anxiety,” Kunal Sawhney, CEO of research group Kalkine, said.

“Financial markets are pricing in the first interest rate hike in over a decade after the federal election. At a time when financial markets are gearing up for the RBA’s inflation-fighting efforts, it is hard to neglect the possibility of an economic contraction emerging from aggressive interest rate hikes,” he added.

Mining giant BHP was a major drag as Australian investors played catch-up with last night’s negative reaction on overseas markets to yesterday’s production downgrades. The Big Australian sank 4.53 per cent to a four-week low.

The quarterly reporting season rolled on with updates from OZ Minerals, Mineral Resources and Telix Pharmaceuticals (more below).  

Going up

Just five of the benchmark’s 200 component companies gained more than 1 per cent as the chill wind blowing from the US pushed traders towards defensive assets.

CSL made a rare appearance at the top of the table with a rise of 1.42 per cent. Charter Hall Retail gained 1.26 per cent, takeover target Ramsay Health Care 1.19 per cent and United Malt 1.07 per cent.

Dan Murphy’s and BWS owner Endeavour Drinks rebounded 1.03 per cent from yesterday’s trading update. JB Hi-Fi advanced 0.96 per cent.

Select property stocks drew a bid. Cromwell Property added 0.59 per cent, Goodman 0.58 per cent and SCA 0.49 per cent.   

At the speculative end of the market, Way2VAT soared 138.64 per cent after launching a debit card that claims to automate GST returns for small and medium businesses. However, Australian businesses will have to wait: the initial rollout will take place in Europe.

Going down

Megaport added to sharp losses yesterday that followed news costs increased last quarter while growth appeared to slow. The cloud computing firm fell another 10.99 per cent to a two-year low.

Uranium miners sank in the wake of sharp losses among US peers overnight. Paladin Energy shed 7.22 per cent, A-Cap 6.9 per cent and Bannerman Energy 6.25 per cent.  

OZ Minerals slid 6.43 per cent after confirming Covid workforce issues dented copper and gold production across the first three months of the year. The miner insisted it remained on track to reach full-year production guidance.

Lithium and iron ore miner Mineral Resources eased 2.1 per cent despite reaffirming production guidance after increasing output by 16 per cent last quarter.

Telix Pharmaceuticals hopes to launch its prostate cancer imaging agent in Australia this quarter following its approval for commercial release in the US. The firm said launch preparations were on track. The share price dipped 1.52 per cent.

Other markets

A broadly negative morning on Asian markets saw the Asia Dow lose 1.44 per cent, Hong Kong’s Hang Seng 1.12 per cent and Japan’s Nikkei 1.92 per cent. China’s Shanghai Composite edged up 0.04 per cent.

US futures remained mired in red. S&P 500 futures declined 17 points or 0.38 per cent. Dow futures shed 0.35 per cent. Nasdaq futures lost 0.4 per cent.

Oil gave back some of its overnight gains. Brent crude fell 73 US cents or 0.7 per cent to US$107.23 a barrel.

Gold bounced US$4.10 or 0.2 per cent to US$1,952.30 an ounce.

The dollar hovered near overnight lows, down 0.03 per cent to 73.58 US cents.

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