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US tech sell-off weighs on Australian sharemarket

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US tech sell-off weighs on Australian sharemarket


Technology companies (down 2.9 per cent) were among the worst performers, tracking a substantial fall in the Nasdaq 100 overnight. WiseTech shed 2.6 per cent, Xero fell 3.7 per cent and Altium lost 3.4 per cent.

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Gold producer Northern Star (down 3.9 per cent), Seek (down 3.8 per cent) and Domino’s Pizza (down 4.1 per cent) were the biggest large-cap decliners.

Miners more broadly shed 1.6 per cent as iron ore heavyweights BHP (down 1.5 per cent), Fortescue (down 1.9 per cent) and Rio Tinto (down 1.4 per cent) fell. The big four banks also traded in the red as CBA shed 1.3 per cent, NAB lost 0.9 per cent, Westpac slipped 0.9 per cent and ANZ dropped 1 per cent.

The lowdown

Haven assets including utilities and consumer staples companies were among the most resilient on the local bourse on Wednesday as traders walked back their bets on the scale of interest rate cuts in the year ahead.

On the flip side, growth stocks which tend to benefit from lower interest rates and higher risk appetite, such as those in the mining, real estate investment trusts and information technology sectors, declined. Technology companies also suffered from a sell-off in technology stocks in the US with the negative sentiment bleeding into the domestic technology sector.

Meanwhile, Asian equities tracked a drop in US stocks and Treasuries. The Hang Seng traded 1 per cent lower, while the Nikkei 225 lost 0.2 per cent.

The Nasdaq 100 dropped the most in more than two months as the tech sector giants dubbed the Magnificent Seven fell. The Bloomberg Dollar Spot Index jumped the most since March, while the yield on the 10-year Treasury rose. Cash Treasuries are closed during Asian hours due to the Japanese holiday.

The first trading day of the new year brought 2023’s scorching rally to a halt after a more than $US8 trillion surge in the S&P 500 last year. The slump in bonds worldwide reflects doubts that policymakers will deliver the extent of monetary easing that’s priced by money markets, with central banks reluctant to give up the fight against inflation too soon.

Traders are waiting for the release of the latest US Federal Reserve minutes on Wednesday. The tone is expected to be hawkish, according to BMO Capital Markets’ Ian Lyngen. “A dovish surprise, while unlikely, would hold far greater shock value for a market that has moved away from taking the Fed at face value in favour of a more sceptical approach,” the strategist wrote.

US job openings data released on Wednesday (Washington time) and Friday’s non-farm payrolls will also be scanned for signs of weakness in the labour market.

“If Fed chairman Powell is right that inflation can slow further without a sharp increase in unemployment, then the stock and bond rallies are justified,” according to Bloomberg Economics.

International Monetary Fund director Kristalina Georgieva.

International Monetary Fund director Kristalina Georgieva.Credit: Bloomberg

Kristalina Georgieva, the head of the International Monetary Fund, told CNN International that the US economy was “definitely” headed for a soft landing thanks to the Fed’s “decisiveness” in taming inflation.

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Almost all emerging-nation currencies traded lower against the greenback on Tuesday. The yen weakened in thin trading as investors monitored conditions after an earthquake in Japan on Monday.

Bitcoin climbed above $US45,000 for the first time in almost two years on Tuesday. Anticipation is intensifying around the expected US approval for an exchange-traded fund investing directly in the biggest token.

In Asia, sentiment was dented after Chinese President Xi Jinping acknowledged some companies and citizens had endured a difficult 2023 in a rare admission of domestic headwinds facing the country.

The People’s Bank of China injected nearly $US50 billion ($74 billion) worth of low-cost funds into policy-oriented banks last month, suggesting the central bank may be ramping up financing for housing and infrastructure projects to support the economy.

Despite persistent weakness in China, some investors consider a slump of almost 60 per cent as a signal to buy Chinese stocks. Almost a third of 417 respondents to Bloomberg’s latest Markets Live Pulse survey say they will increase their China investments over the next 12 months.

Tweet of the day

Quote of the day

“I firmly believe now is the right time to commence a transition to a new chairman,” said Endeavour chairman Peter Hearl as he and the son of billionaire pub baron and largest shareholder Bruce Mathieson stepped down following a public spat.

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with Bloomberg



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