The local share market has suffered its third fall in four sessions off the back of the anxious US market, where concerns over interest rate rises and recession dampened investor confidence.
The benchmark S&P/ASX200 index on Wednesday closed down 106.2 points, or 1.56 per cent, to 6700.2, while the broader All Ordinaries dropped 108.6 points, or 1.54 per cent, to 6921.4.
CMC Markets analyst Azeem Sheriff said the sell-off took its lead from Wall Street, where investors are fretfully awaiting an announcement on rate hikes, due in Australia’s pre-dawn hours on Thursday.
While the ASX will be closed for the National Day of Mourning public holiday, Mr Sheriff warned the negative impacts of this fifth consecutive hike could make Friday’s open tough.
“It’s going to be like a left punch and a right punch on Friday – a double hit,” he said.
“Whatever accumulates overnight and accumulates on Thursday night Sydney time is going to flow into the ASX on Friday.”
If the Federal Reserve announces a 100 basis point increase, there will be a negative flow-on effect across the global markets, Mr Sheriff said. But if the central bank announces a 75 basis point rise, which is seen as more likely, then the market will look at Fed’s commentary for clues about its future actions.
“If they do remain hawkish then that’s quite negative for equities, but if they start to look dovish, that could be a positive sign,” he explained.
Every sector of the ASX fell except for telecommunications, which edged 0.1 per cent higher.
Mining was the biggest laggard, falling 2.6 per cent as iron ore prices dropped.
BHP was down 3.1 per cent to $37.96, Fortescue fell 4.4 per cent to $16.54 and Rio Tinto declined 3.7 per cent to $91.23.
All the big banks were down, with NAB falling 1.3 per cent to $29.82, CBA down 1.1 per cent to $95.45, Westpac down 0.7 per cent to $21.73 and ANZ down 1.0 per cent to $23.60.
There were a few gainers.
Pilbara Minerals added 1.0 per cent to finish at an all-time closing high of $4.94.
Also, Brickworks closed up 0.4 per cent to $21.77 after the brick manufacturer announced its net profit for the 12 months to July 31 had more than tripled, to $854 million.
Coalminers were also hitting fresh all-time highs on surging coal prices. Whitehaven closed up 3.8 per cent to $8.96 and New Hope added 3.7 per cent to $6.16.
Viva Energy climbed 4.6 per cent to $2.75 after agreeing to buy the Coles Express convenience store and petrol network from Coles for $300m.
It had been a fuel supplier to the 710-station chain, and Viva chief executive Scott Wyatt said it’ll make the company Australia’s clear number two player in both the fuel and convenience sector.
Coles closed down 0.9 per cent to $16.60.
Santos dropped 1.0 per cent to $7.75 after a Federal Court justice ordered the company to halt drilling at its Barossa gas field northwest of Darwin, ruling in favour of a Tiwi Islander who claims he wasn’t consulted about the company’s environmental plan.
Santos plans to appeal to the full Federal Court.
Meanwhile, the Australian dollar had dropped to its lowest level since June 2020 against its US counterpart, which is strengthening on the near-certainty of a substantial rate hike.
The Aussie was buying 66.72 US cents, from 67.20 US cents at Monday’s close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Wednesday dropped 106.2 points to 6700.2, a fall of 1.56 per cent.
* The broader All Ordinaries dropped 108.6 points, or 1.54 per cent, to 6921.4.
One Australian dollar buys:
* 66.72 US cents, from 67.20 US cents at Tuesday’s close
* 95.85 Japanese yen, from 96.40 yen
* 67.31 Euro cents, from 67.05 cents
* 58.83 British pence, from 58.71 pence
* 113.34 NZ cents, from 113.11 cents.
Kat Wong and Derek Rose
(Australian Associated Press)