A third straight day of falls has taken the Australian share market to its lowest level in more than seven months.
The benchmark S&P/ASX200 index dropped 0.9 per cent to 5,655.4 points, its lowest level since early February, as almost all sectors of the market were hit by selling.
Commsec analyst Steven Daghlian said signs that interest rates will continue to rise in the US in 2018 combined with speculation that the Reserve Bank of Australia will hike rates twice in 2018.
"The market has seen heavy falls across the board from the opening, with some jittery investors anxious about rate hikes selling banks, telcos and healthcare companies," Mr Daghlian said.
ANZ was the worst performer among the big four banks, down 0.9 per cent, while Commonwealth Bank, Westpac and National Australia Bank dropped by 0.3 per cent to 0.5 per cent.
Weaker iron ore prices sent the miners lower, with BHP Billiton down 0.8 per cent at $25.99, Rio Tinto down 0.9 per cent at $65.50 and Fortescue Metals three per cent weaker at $5.17.
The energy sector was a lone area of strength, supported by rising oil prices, with Santos up 1.8 per cent at $3.99 and Woodside Petroleum up 1.8 per cent at $28.77.
Gaming giants Tabcorp and Tatts were lower after Wednesday's Federal Court decision to send their merger deal back to the Australian Competition Tribunal for further review.
Tabcorp dropped 1.3 per cent to $4.24 and Tatts lost 1.4 per cent to $4.02.
The Australian dollar dropped more than one US cent over the course of the day, due to the US dollar's positive reaction to US Federal Reserve chair Janet Yellen's hawkish commentary on rates and stimulus tapering.
The Australian dollar was close to 81 US cents before the Fed signalled a rate rise before the end of 2017 and more in 2018, and was trading at 79.59 US cents at 1700 AEST.
ON THE ASX:
* The benchmark S&P/ASX200 dropped 53.7 points, or 0.94 per cent, to 5,655.4 points.
* The broader All Ordinaries index shed 53 points, or 0.92 per cent, to 5,716.7 points
* The SPI200 futures contract was down 57 points, or one per cent, at 5,642 points.
* National turnover was 3 billion securities traded worth $6.5 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 79.59 US cents, from 80.38 US cents on Wednesday
* 89.66 Japanese yen, from 89.61 yen
* 66.91 euro cents, from 66.99 euro cents
* 58.92 British pence, from 59.48 pence
* 108.85 NZ cents, from 109.24 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,294.27 per fine ounce, from $US1,312.20 per fine ounce on Wednesday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 2.0656pct, from 2.0735pct on Wednesday
* CGS 4.75pct April 2027, 2.7752pct, from 2.7758pct
Sydney Futures Exchange prices:
* December 2017 10-year bond futures contract at 97.135 (implying a yield of 2.865pct), from 97.14 (2.86pct) on Wednesday
* December 2017 3-year bond futures contract at 97.78 (2.22pct), unchanged.
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)
U.S. stock indexes were trading lower on Thursday, weighed down by Apple and rising expectations for a third interest rate hike this year.
The S&P and the Dow were on track to snap a string of record sessions and Apple (AAPL.O) was the biggest drag on the three major indexes with a 1.3-percent drop on concerns about demand for its latest smartphone.
Investors increased bets the U.S. Federal Reserve would raise rates again this year and were also assessing the impact of the central bank’s decision to start reducing its roughly $4.2 trillion U.S. Treasury bonds and mortgage-backed securities.
With investors reacting to the signal for another rate hike and the start of the Fed’s balance sheet normalization, the market does not appear to reflect the risks associated with U.S.-North Korea tensions and high valuations, said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.
“The market is down 10 basis points but it is very complacent and very comfortable in its own skin right now and not really concerned about risk,” said Cecchini, citing low market volatility.
The CBOE Volatility Index .VIX was slightly higher on Thursday at 9.79, but had hit its lowest level since August 8 earlier in the day.
Investors are now pricing in about a 70-percent chance of a December hike, according to CME’s FedWatch tool, up from about 51 percent just prior to the Fed meeting.
At 2:58 p.m. ET, the Dow Jones Industrial Average .DJI fell 36.4 points, or 0.16 percent, to 22,376.19, the S&P 500 .SPX lost 4.73 points, or 0.19 percent, to 2,503.51 and the Nasdaq Composite .IXIC dropped 21.34 points, or 0.33 percent, to 6,434.71.
Fed Chair Janet Yellen said the fall in inflation this year remained a mystery, adding that the central bank was ready to change the interest rate outlook if needed.
“Today’s movement is most likely a give-back as people digest the Fed statement and press conference,” said Michael Dowdall, investment strategist at BMO Global Asset Management.
“Clearly, the Fed doesn’t have answers on the 2017 low inflation weakness, but they’re still very sensitive to falling behind the curve so they want to stay in front of the inflation curve.”
Source: Netwealth Morning Business Roundup
Breakfast this morning includes bacon especially for @RockstarJones. Not sure if this is what he had in mind.
