ASX has second straight day of big losses after overseas markets hammered by ‘wall of worry’

The ASX followed Wall Street and other markets downward as a heady brew of unsettling economic news weighed on investors.

The Australian sharemarket fell heavily but not as hard as Wall Street, where a heady brew of economic factors weighed on sentiment, including the US Federal Reserve moving closer to tapering stimulus measures.

The benchmark S&P/ASX200 index closed 1.08 per cent lower at 7196.7 while the All Ordinaries Index fell 1.07 per cent to 7500.2.

In the US, the tech-heavy Nasdaq suffered its biggest drop since March and dragged down the broader market, finishing 2.8 per cent lower while the Dow Jones shed 1.6 per cent and the S&P 500 lost 2 per cent.

Ord Minnett said that came as Treasury yields traded near three-month highs and sent the clearest signals yet that the central bank was moving closer to begin tapering its support.

A drop in US consumer confidence added to the negative sentiment as lawmakers in Washington continued their stalemate over the debt ceiling in ongoing budget negotiations.

European stocks also fell as a surge in government bond yields knocked high-growth technology shares, with fresh signs of a slowdown in China’s economy and an unfolding power crisis in some provinces weighing on investor sentiment.

CommSec described the raft of news as a “wall of worry” for global sharemarkets, with the group’s market analyst Steven Daghlian noting it was the second straight day of substantial weakness on the local bourse.

“This comes courtesy of our American friends,” he said.

“In the past 24 to 48 hours, most of the attention has been on higher US interest rates.

“Bond prices have fallen in the US, yields on 10-year bonds have been on the way up and they’ve actually hit their highest level since June … this is often considered to be a bit of a benchmark for borrowing costs for companies and households worldwide so it has unsettled markets in recent days.

“The market is also coming to terms with a number of central banks that have made it quite clear of their intentions to start gradually reducing emergency stimulus measures as early as the next couple of months.

“It has also been secondly focused on energy prices, which were a lot calmer last night but they have been surging recently and this is on growing concerns of an energy shortage in China in particular, and has been pushing oil, gas and coal prices higher.

“In turn, that’s something that could push inflation higher as well. That’s something that US central bank chair Jerome Powell flagged in a speech last night.

“So a number of factors at play.”

On the ASX, tech stocks were unsurprisingly hard hit, following the Nasdaq’s lead.

Buy-now-pay later market darling Afterpay sank 4.17 per cent to $121.93, smaller rival Zip declined 1.83 per cent to $6.97, data centre operator NEXTDC backtracked 2.73 per cent to $12.12, electronics design software group Altium retreated 1.97 per cent to $34.90 and accounting software provider Xero gave up 1.78 per cent to $137.85.

“Last year, the Aussie tech sector was up 56 per cent while the broader Aussie market was actually down by about 1.5 per cent, so keep that in mind,” Mr Daghlian said.

OMG chief executive Ivan Tchourilov warned that bond yields picking up meant reserve banks may need to take action to reduce inflation before the end of the year.

This is likely to come by way of interest rate hikes, which would take a lot of value out of traditionally debt-laden tech stocks, which had enjoyed years of record low interest rates.

“Neobank and fintech, Tyro Payments, was down more than five per cent for most of the day, with weekly transaction value updates not enough to combat the tech sell-off,” Mr Tchourilov noted.

Tyro closed 5.83 per cent lower at $3.88.

In the healthcare sector, biotech giant CSL lost 2.58 per cent to $286.86.

Despite tight oil supply paired with supply bottlenecks, energy stocks snapped their six-day winning streak, with Woodside subtracting 2.2 per cent to $23.50, Oil Search erasing 2.05 per cent to $4.31 and Santos slipping 1.26 per cent to $7.03.

Among the miners, Mineral Resources sank 5.6 per cent to $43.33, BHP fell 1.3 per cent to $36.39, Rio Tinto eased 0.6 per cent to $96.89 and Fortescue softened 0.47 per cent to $14.80.

But defensive gold stocks shone.

St Barbara surged 6.69 per cent to $1.35, Regis Resources jumped 6.32 per cent to $2.02, Silver Lake Resources put on 5.5 per cent to $1.34, Evolution Mining improved 4.19 per cent to $3.48, Perseus Mining gained 3.33 per cent to $1.39 and Newcrest added 1.89 per cent to $22.63.

Smartgroup Corporation, which companies use to outsource their employee benefits and administration services, received an indicative takeover offer from a consortium comprising TPG Global and Potentia Capital of $10.35 per share, sending its stock soaring 18.07 per cent to $9.28.

Embattled casino operator Crown Resorts announced Redbubble chair Anne Ward had become an independent non-executive director.

Crown’s interim chair Jane Halton said the appointment strengthened the mix of capability and experience “as we continue the refresh the board”, while Ms Ward said she looked forward to being “an agent for positive change”.

Crown, which is still being grilled at a royal commission in Perth over its money laundering scandal, dipped 0.53 per cent to $9.42.

Investment fund Touch Ventures had a stellar ASX debut, rocketing 26.25 per cent to 50.5 cents.

Pinnacle Investment Management Group was a particularly poor performer, plunging 9.05 per cent to $16.29.

ANZ slipped 0.47 per cent to $27.49, Commonwealth Bank declined 1.33 per cent to $102.62, National Australia Bank backtracked 0.9 per cent to $27.24 and Westpac shed 0.55 per cent to $25.17.

The Aussie dollar was fetching 72.59 US cents, 53.55 British pence and 62.11 Euro cents in afternoon trade.

Originally published as Australian sharemarket has second straight day of big losses after overseas markets hammered by ‘wall of worry’

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