Aussie technology names and treasuries were sold-off as investors reacted to the Fed’s meeting minutes which signalled a hawkish slant, tracking losses on Wall St after minutes showed that the central bank entertained the idea of a faster timetable for rate hikes this year, as soon as March. The sell-off on the local bourse is across the board with materials as the outlier, lifting higher.
Market participants also assessed the longer-term implications of the Federal Reserve’s hawkish tilt, its focus on shrinking its balance sheet while fretting about valuations, and elevated earnings growth for tech.
Rising bond yields generally signal that traders are optimistic for future economic growth, but can also indicate a peak in inflation which is not too far away. The sell-off in bonds, which pushes the yield higher, propelled investors to rotate away from technology firms, which thrived in a stay-at-home economy, and look to companies where inflation could be passed down to the end consumer or companies tied to the reopening of the economy.
Bright spots like retail giants Woolworths (ASX:WOW) and Endeavour Group (ASX:EDV) are both firming up by 0.3 per cent, while Graincorp (ASX:GNC) is edging higher by 0.1 per cent at $8.45.
Iron ore miners are bucking the trend pushing the materials sector to be the only advancer across the steep decline today, benefitting from the rise in the iron ore price. BHP (ASX:BHP) is leading the pack by 1.5 per cent, followed by Rio Tinto (ASX:RIO) and Fortescue Metals (ASX:FMG) both adding 1.3 per cent.
As market participants are pricing an interest rate hike in March underpinning the tech-off, locals are also mulling on the daily Covid-19 cases which hit a record with more than 68,000 new cases across the nation while watching Afterpay (ASX:APT) the largest darling in the tech sector, suffering a 9.9 per cent crash to the lowest level since August 2020.
Energy stocks snapped its winning streak with falls around the 1 per cent range seen by Woodside Petroleum (ASX:WPL) and Santos (ASX:STO).
ANZ (ASX:ANZ) is shedding the least, down 0.3 per cent while Commonwealth Bank (ASX:CBA) fell 1.1 per cent. Westpac (ASX:WBC), National Australia Bank (ASX:NAB), and Macquarie Bank (ASX:MQG) slipped by 0.6 to 0.9 per cent.
At noon, the S&P/ASX 200 is 1.2 per cent or 88 points lower at 7,478.
The SPI futures are pointing to a fall of 95 points.
Local economic news
ISM Markit services purchasing managers business activity Index fell to 55.1 in December from 55.7 in November, seasonally adjusted signally growth at a slower pace.
Digital payments giant Latitude (ASX:LFS) unveiled its plans to buy the consumer finance division of Humm for $335 million. The proposed transaction “will cement Latitude’s position as the leading instalments and consumer lending business in Australia and New Zealand”. Shares are trading 0.3 per cent higher at $1.97.
In other M&A news, Life360 (ASX:360) has completed its $283 million takeover of bluetooth-tracking device company Tile. Shares are trading 3.4 per cent lower at $8.81.
Meanwhile, a Nickel Mines (ASX:NIC) project in Indonesia has received corporate tax relief from the Jakarta government. The tax concessions include waiving income tax for a decade, followed by a 50 per cent discount for the following two years. Shares are trading 0.7 per cent higher at $1.45.
Insurer IAG (ASX:IAG) has maintained its $10 billion catastrophe reinsurance protection cover, the same level as 2021. Shares in IAG (ASX:IAG) are trading 0.5 per cent higher at $4.45.
Poker machines giant Aristocrat Leisure (ASX:ALL) has hit a roadblock in its $3.9 billion bid for Playtech as the British gambling software company continues talks with a rival bidder. Shares are trading 3.2 per cent lower at $43.80.
Best and worst performers
The best-performing sector is Materials, up 0.04 per cent. The worst-performing sector is Information Technology, down 4.4 per cent.
The best-performing stock in the S&P/ASX 200 is Paladin Energy (ASX:PDN) trading 4.9 per cent higher at $0.96, followed by shares in Clinuvel Pharmaceuticals (ASX:CUV), and BHP Group (ASX:BHP).
The worst-performing stock in the S&P/ASX 200 is Pinnacle Investment (ASX:PNI) trading 10 per cent lower at $14.18, followed by shares in Afterpay (ASX:APT), and Novonix (ASX:NVX).
Commodities and the dollar
Gold is trading at US$1810.16 an ounce.
Iron ore is 0.42 per cent higher at US$120.40 a ton.
Iron ore futures are pointing to a rise of 2.9 per cent.
One Australian dollar is buying 72.18 US cents.