Aussie shares dip after Wall St slumps on rates outlook
Australia’s stock market tumbled after hawkish signals from the new chairman of the US Federal Reserve sparked a sell-off on Wall Street.
The S&P/ASX200 fell 39.3 points, down 0.44 percent, to 8,927 points at midday trading on Thursday, while the broader All Ordinaries index fell 39.9 points, down 0.43 percent, to 9,146 points.
“US equity markets closed lower overnight after this morning’s Federal Open Market Committee meeting delivered a hawkish surprise that triggered a sell-off in equities and a sharp rise in US yields and the US dollar,” said IG market analyst Tony Sycamore.
“This time, nine out of 19 officials predict at least one rate hike by the end of the year, and the policy statement markedly removed earlier mentions of potential cuts.”
The local stock market briefly recovered before diving into the red after the federal government announced it would spare small businesses from proposed capital gains tax reforms to ease concerns about the controversial shakeup.
Oil prices continued to fall as the United States and Iran signed a long-awaited memorandum of understanding that included a 60-day ceasefire, the opening of the Strait of Hormuz, and the lifting of sanctions on Iranian crude oil supplies.
Local energy shares shrugged off the decline despite gaining 0.4 per cent at midday AEST, with Woodside strengthening after selling for much of the week.
The miners were stagnant; Materials gave back 0.9 per cent as mega-miners BHP, Rio Tinto and Fortescue lost ground as gold stocks began to boil and iron ore futures fell to 15-week lows.
Gold fell as markets repriced the US interest rate outlook and partially recovered by lunch to reach US$4320 ($A6,142) an ounce.
Large banks also put pressure on the broader market; NAB financials fell 0.8 per cent, with the big four banks falling.
QBE Insurance provided some support to the sector, gaining 1.8 per cent following the appointment of Christopher Harris, chief executive of Monarch Point Re, to the board as a non-executive director.
Traditionally defensive sectors such as consumer staples and healthcare rose 0.5 percent each, while IT stocks fell 1.1 percent.
Qantas shares rose one per cent to $10.08 after the company announced it would launch the world’s first non-stop flights from Sydney to London in October 2027, according to company news.
Washington H. Soul Pattinson shares gained 1.8 percent after Brickworks agreed to divest its stake in its industrial joint venture real estate trusts to Goodman Group for $1.9 billion.
Australian superannuation funds are on track for a fourth consecutive year of strong returns, with Chant West estimating the average growth fund return for the financial year to date is nine per cent.
The greenback rose on the Federal Reserve’s hawkish outlook, with the Australian dollar buying 70.32 US cents from 70.58 US cents at 5pm on Wednesday.
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