Australian stocks fall on back of US rates talk


The Australian share market has suffered its worst drop in more than a month, fuelled by speculation of more US interest rate hikes.

The benchmark S&P/ASX200 index on Thursday closed down 39.8 points, or 0.53 per cent, to a nine-day low of 7,490.3.

The broader All Ordinaries finished 44.7 points lower, or 0.58 per cent, at 7,695.8.

The losses came after four US Federal Reserve board members, in separate events overnight, stressed the need for interest rates to stay elevated to tame inflation, said State Street Global Advisors SPDR ETF equity strategist Julia Lee.

“It might be a long fight, with interest rates higher for longer than some are currently expecting,” Fed governor Christopher Waller said in Arkansas.

“We are not done yet with raising interest rates,” echoed governor Lisa Cook in Washington.

The comments fuelled an increase in bets that US interest rate would peak higher than expected and had a negative impact on risk on Thursday’s session, Ms Lee told AAP.

In overnight trading, the S&P500 fell 1.1 per cent and the Nasdaq dropped 1.7 per cent.

While the ASX didn’t fall as sharply as Wall Street, all its 11 sectors closed in the red.

Utilities were the biggest losers, dropping 2.7 per cent after a profit downgrade hit the sector.

Electricity provider AGL plummeted 10.3 per cent to a three-month low of $7.12 after announcing an underlying half-year net profit of just $87 million, compared with consensus expectations of $160m.

Unplanned first-quarter outage at two of its coal-fired power stations, Loy Yang in Victoria and Liddell in NSW – coinciding with a planned outage at AGL’s Bayswater power plant in Muswellbrook – resulted in a “particularly challenging period” in July, CEO Damien Nicks said.

The big banks were mixed, with ANZ up 0.5 per cent to $25.92 as Australia’s second-biggest bank reported its mortgage lending increased by $7 billion in the three months to December 31.

NAB fell 0.3 per cent to $31.95 while CBA dipped 0.1 per cent to $110.21. Westpac was flat at $23.90.

In the heavyweight mining sector, Fortescue Metals was up 0.2 per cent to $22.52 while Rio Tinto was down 0.3 per cent to $123.85.

BHP was up 0.1 per cent to $48.12 following Wednesday’s fatal accident at the miner’s railyard in Port Hedland, WA.

Coalminers Whitehaven, New Hope and Yancoal were down by between 4.5 per cent and 5.9 per cent.

In the biggest move of the day, a major investor in Whitehaven dumped $337 million in stock shortly before close.

The block trade of 42.63 million shares, accounting for a 4.8 per cent stake, was done at a 7.5 per cent discount, according to the Australian Financial Review.

Property developer Mirvac was down 4.6 per cent to $2.29 after announcing its statutory profit for the six months to December 31 fell 62 per cent to $215m on the back of lower settlement rates.

Despite the subdued result, outgoing CEO Susan Lloyd-Hurwitz said the group was in a strong position to navigate the challenges of inflation, labour shortages and interest rate rises ahead.

Maas Group climbed 6.6 per cent to $3.07 as the diversified construction company announced it expected to report a 60 per cent jump in first-half earnings, to about $64m to $66m.

The Australian dollar slid against most major currencies, buying 69.55 US cents, from 69.64 at Wednesday’s ASX close.

Looking ahead, investors will be keeping a close eye on US jobless figures when they drop overnight. A strong jobs report could signal bad news for equities as it raises the likelihood of further Fed rate increases

ON THE ASX:

* The benchmark S&P/ASX200 index ended Thursday down 39.8 points, or 0.53 per cent, at 7,490.3.

* The broader All Ordinaries fell 44.7 points, or 0.58 per cent, to 7,695.8.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 69.55 US cents, from 69.64 US cents at Wednesday’s ASX close

* 91.47 Japanese yen, from 91.35 Japanese yen

* 64.81 Euro cents, from 64.91 Euro cents

* 57.54 British pence, from 57.88 pence

* 109.59 NZ cents, from 110.16 NZ cents.



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