The local share market has dropped sharply for a second day running, hitting its lowest levels since March as worries about United States banks and rising interest rates drag on financial markets worldwide.
The benchmark S&P/ASX200 index on Wednesday finished down 70 points, or 0.96 per cent, to 7,197.4, its lowest close since March 31. The broader All Ordinaries fell 70.8 points, or 0.95 per cent, to 7,389.
The losses came after another down day on Wall Street, where the S&P500 fell 1.2 per cent as the shares of mid-sized banks PacWest, Western Alliance and HomeStreet Bank plunged by double-digits amid concerns about their balance sheets.
“It’s a question of which one will be next in the US at the moment – once a bank’s share prices declines, it kind of feeds on itself,” Betashares chief economist David Bassanese told AAP.
“So there’s a bit of a feeding frenzy going on amongst the small and medium-sized banks at the moment.”
Mr Bassanese said markets were also falling in reacting to the fact central banks around the world “don’t seem to be wavering in their intention to raise interest rates”.
Markets globally seemed shocked by the Reserve Bank of Australia’s rate hike on Tuesday, he said, and there were fears the Federal Reserve would be quite hawkish when it announces the results of its latest board meeting at 4am AEST on Thursday.
Traders worry the Fed might “not only raise rates but signal a continued tightening bias rather than keeping rates on hold”, Mr Bassanese said.
Amid the souring sentiment, oil prices slumped $5 to a six-week low of $US75, while gold prices rose over $US30 an ounce to a two-week high $US2017.
Every sector of the ASX was lower save consumer staples, which were basically flat, and telecommunications, which rose 0.3 per cent.
The energy sector was the biggest loser, falling 2.1 per cent as Woodside dropped 2.3 per cent to $32.63 and Santos retreated 2.5 per cent to $6.97 despite speculation from research house E&P Financial that the oil and gas giant could be an attractive takeover target.
All the big banks were deep in the red.
NAB dropped 1.9 per cent to $28.55, CBA 1.8 per cent to $98.29, Westpac 1.7 per cent to $22.16 and ANZ 1.6 per cent to $24.03.
In the heavyweight mining sector, the iron ore giants were down as the price of the commodity fell to a five-month low of $US105 a tonne.
BHP dropped 0.8 per cent to $43.27, Fortescue retreated 4.1 per cent to $19.99 and Rio TInto subtracted 2.1 per cent to $108.77.
Goldminers made substantial gains however with Newcrest up 1.8 per cent, Northern Star adding 2.3 per cent and Evolution 3.7 per cent.
A number of companies were posting third-quarter trading updates and presentations to the Macquarie conference.
Ooh! Media had plunged 23.9 per cent to a six-month low of $1.24 after the out-of-home advertising company told the conference April advertising revenue had been “particularly soft,” down 10 per cent from a year ago.
It also noted it expected profits margin pressure in 2023/24 as a result of tender renewals.
JB Hi-Fi rose 2.0 per cent to $45.48 after third-quarter same-stores sales growth had started to moderate, as expected, but were still well above pre-COVID levels.
Domain Holdings fell 3.0 per cent to $3.23 after the property platform told the Macquarie conference listings were down 15.5 per cent in the third quarter, compared to a year ago.
Amcor, trading ex-dividend, dropped 9.5 per cent to $14.91 after the consumer packaging company downgraded guidance around five per cent, citing weak demand as consumers wind back spending.
CEO Ron Delia said the company expected market conditions in the near-term so was continuing its efforts to cut costs.
The Australian dollar was buying 66.67 US cents, from 67.06 US cents at Tuesday’s ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Wednesday down 70 points, or 0.96 per cent, at 7,197.4
* The broader All Ordinaries dropped 70.8 points, or 0.95 per cent, to 7,389.
One Australian dollar buys:
* 67.07 US cents, from 67.07 US cents at Tuesday’s ASX close
* 90.62 Japanese yen, from 92.31 Japanese yen
* 60.41 Euro cents, from 60.99 Euro cents
* 53.26 British pence, from 53.64 British pence
* 106.95 NZ cents, from 108.20 NZ cents.
(Australian Associated Press)