Australian shares fell more than 1 per cent in a broad sell-off, as investors prepare for a central bank policy meeting where they are widely expected to raise interest rates for the first time in more than a decade.
the main points:
- Technology stocks led the decline in the ASX index, falling 4.3 percent
- The Nasdaq lost 4 percent last Friday, posting the largest monthly decline since 2008
- Global stock index falls, showing weakest month since March 2020
The ASX 200 was down 1.6 per cent at 7315 at 12:21 pm AEST.
The Reserve Bank of Australia is expected to raise interest rates on Tuesday, joining a long list of central banks that are now expected to tighten their policies at a much faster pace than previously thought to tame rising inflation.
Australian consumer prices rose at the fastest annual pace in two decades in the last quarter, likely prompting the central bank to move toward normalization but as a result raising fears of an economic slowdown.
Almost every sector was lower.
Among the losers on the benchmark index, technology shares fell 4.3 percent after their US counterparts fell sharply at the end of last week as the biggest rise in monthly inflation since 2005 already worried investors about raising interest rates.
Xero fell 6.7 percent to $89.86, Tero fell 6 percent to $1.18, and Block lost 3.1 percent to $140.67.
Finance sank 1 percent, with the “big four” lenders losing between 0.1 percent and 1.5 percent.
National Australia Bank lost as much as 1.5 per cent as the lender entered into a deal with the country’s financial crime regulator to address concerns about suspected serious violations of anti-money laundering and anti-terror laws.
Miners were down 0.5 percent, with BHP, Rio Tinto and Fortesco Metals Group shares down between 0.1 percent and 0.8 percent.
AGL Energy shares fell 0.7 percent after news of its profit forecast for fiscal year 2022 being cut, due to the damage to a unit closure at the Loy Yang A power plant in Victoria after an electrical failure in a generator.
However, Qantas jumped 3 percent, to $5.77, after announcing it expected to return to profitability in the 2023-24 fiscal year, and launching its direct lines from Sydney to London and New York from 2025.
The company said it is seeing a strong return to domestic demand and a rebound in international travel.
It said it expects core earnings before interest and taxes to be between $450 million and $550 million for the second half of fiscal 2022.
Webjet and Flight Center shares also rose, adding 0.2 percent and 1 percent, respectively.
Gold stocks fell nearly 2 percent as bullion prices fell under pressure from higher US Treasury yields.
The Australian dollar was down to 70.40 US cents this afternoon.
US stocks stumble on inflation fears
Stocks on Wall Street closed sharply lower on Friday with the latest economic data, disappointing Amazon quarterly report and expectations highlighting rising inflation.
The Dow Jones Industrial Average fell 938.99 points, or 2.77 percent, to 32977.4 points, the Standard & Poor’s 500 lost 155.58 points, or 3.63 percent, to 4131.92 points, and the Nasdaq Composite fell 536.89 points, or 4.17 percent, to 12,334.64 points.
The Nasdaq showed its biggest monthly drop since October 2008.
Amazon shares closed 14 percent lower after the e-commerce giant delivered a disappointing quarter and forecast late Thursday as it was swamped by rising costs to operate its warehouses and deliver packages to customers.
Stocks came under pressure after data showed that monthly inflation rose by the most since 2005 while US consumer spending rose more than expected in March amid strong demand for services.
Also, US labor costs in the first quarter rose by the most in 21 years, pointing to rising wage inflation, supporting Fed policy tightening ahead of its scheduled meeting this week.
Ian Lingen, head of US price strategy at BMO Capital Markets, notes that the data could trigger a more hawkish Fed response.
The European STOXX 600 Index is up 0.74 percent, but the MSCI gauge of stocks worldwide is down 1.9 percent.
On the last trading day of April, the global index was on track for its biggest monthly drop since March 2020.