Australian shares have fallen more than 1 per cent in broad-based selling, as investors braced for a central bank policy meeting where it is widely expected to hike interest rates for the first time in more than a decade.
- Tech stocks led the ASX decline, dropping 4 per cent
- Nasdaq has lost 4 per cent last Friday, registering the biggest monthly dip since 2008
- World stocks index falls, shows weakest month since March 2020
The ASX 200 was down 1.2 per cent, to 7,347 on Monday.
The Reserve Bank of Australia is expected to raise interest rates on Tuesday, joining a long list of central banks now expected to tighten policies at a much faster pace than previously thought to tame surging inflation.
Australian consumer prices surged at the fastest annual pace in two decades last quarter, likely prompting the central bank to move towards normalisation but as a consequence sparking fears of an economic slowdown.
Almost every sector was lower.
Among the losers on the benchmark, technology stocks dropped 4 per cent after their US peers fell sharply at the end of last week as the biggest surge in monthly inflation since 2005 spooked investors already worried about rate hikes.
Xero dropped 6.6 per cent to $90.00, Tyro was down 5.6 per cent to $1.19, and Block lost 2.2 per cent to $142.00.
Financials sank 0.8 per cent. NAB lost up to 1 per cent as the lender entered a deal with the country’s financial crime regulator to address concerns around suspected serious breaches of anti-money laundering and counter-terrorism laws.
Miners dropped 0.7 per cent, with BHP down 0.1 per cent.
Shares of Rio Tinto and Fortescue Metals Group were up 0.7 per cent and 0.1 per cent respectively.
AGL Energy was down 0.7 per cent on news that it trimmed its profit forecast for fiscal 2022, due to a hit from the shutdown of a unit at its Loy Yang A power station in Victoria after an electrical fault with a generator.
However, Qantas jumped 2.9 per cent, to $5.76, after announcing that it expected to return to profitability in the financial year 2023-24, and launching its direct routes from Sydney to London and New York from 2025.
The company said it was experiencing strong return to domestic demand and recovery in international travel.
It said it expected underlying earnings before interest and tax to be between $450 million to $550 million for the second half of the 2022 financial year.
Shares of Webjet and Flight Centre were also up, by 1.2 per cent and 1.8 per cent respectively.
Gold stocks fell almost 1.8 per cent as bullion prices dipped on pressure from elevated US Treasury yields.
The Australian dollar was down at 70.52 US cents this afternoon.
US stocks tumble on inflation concerns
Wall Street equities closed sharply lower on Friday with the latest economic data and Amazon’s disappointing quarterly report and outlook keeping the spotlight on surging inflation.
The Dow Jones Industrial Average fell 938.99 points, or 2.77 per cent, to 32,977.4, the S&P 500 lost 155.58 points, or 3.63 per cent, to 4,131.92, and the Nasdaq Composite dropped 536.89 points, or 4.17 per cent, to 12,334.64.
The Nasdaq showed its biggest monthly decline since October 2008.
Amazon shares closed down 14 per cent after the e-commerce giant delivered a disappointing quarter and outlook late Thursday as it was swamped by higher costs to run its warehouses and deliver packages to customers.
Equities were under pressure after data showed that monthly inflation surged by the most since 2005 while US consumer spending increased more than expected in March amid strong demand for services.
Also, first quarter US labour costs surged by the most in 21 years, pointing to rising wage inflation, supporting Federal Reserve policy tightening ahead of its scheduled meeting this week.
Ian Lyngen, head of U.S. Rates Strategy at BMO Capital Markets notes that the data could lead to a more hawkish response from the Fed.
The pan-European STOXX 600 index had risen 0.74 per cent but MSCI’s gauge of stocks across the globe shed 1.9 per cent.
On the last trading day of April, the global index was on course for its biggest monthly decline since March 2020.