Australia’s share market has wiped the previous session’s gains with interest after US bond yields surged, as global borrowing costs and high oil prices continue to sap investor confidence.
The S&P/ASX200 dropped 132.4 points by midday, down 1.51 per cent, to 8,656.6, as the broader All Ordinaries tumbled 132.6 points, or 1.48 per cent, to 8,836.6.
The slump came after end-of-month selling and surging US bond yields weighed on Wall Street overnight, overshadowing what should have been a welcomed US inflation report, Moomoo chief market strategist Tapas Strickland said.
“For Australian investors, the key test is whether local corporate earnings can weather higher global bond yields and elevated energy costs,” he said.
“Defensive positioning and balance sheet discipline will likely dictate performance as we enter the final quarter of the year.”
The heavyweight financials sector shrank by 1.6 per cent into a sea of red, as CommBank slipped 0.6 per cent to $150.05 and its remaining big four competitors lost 1.7 per cent or more in early trade.
Energy stocks were hit hardest, down 2.5 per cent despite a rebound in oil prices after Wednesday’s sell-off.
The Brent crude benchmark was trading near $US98 a barrel after a partial recovery in Saudi oil exports, however the central conflict between the US and Iran shows little sign of easing.
The raw materials segment dived almost one per cent in a broad-based sell-off, with BHP, Rio Tinto and Fortescue all bleeding lower after China’s widely anticipated economic stimulus policy turned out narrower than hoped, taking iron ore futures to almost two-year lows of $92.80 a tonne.
Gold producers also sold off, despite the underlying commodity holding relatively steady near $US4,161 ($A5,991) an ounce.
Health care, consumer staples and real estate were some of the worst performing sectors, each down 1.9 per cent or more, while consumer discretionaries dropped by almost one per cent.
In company news, refinery operator Ampol has announced it will buy electric vehicle charging company Evie Networks for $225 million.
Lynas Rare Earths is set to acquire Brazilian explorer Meteoric, which reportedly owns the largest rare earths resource outside of China, for $968 million.
The federal and Tasmanian governments have announced a $200 million bailout for Rio Tinto’s Bell Bay aluminium smelter in northern Tasmania.
The Australian dollar is buying 69.44 US cents, down from 69.71 US cents on Wednesday at 5pm.
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