ASX slumps, tracking losses on Wall Street; BHP falls after scrapped Anglo deal

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket fell for a third consecutive trading session to a one-month low, as investors sold off equities amid concerns persistently high inflation would prompt the Reserve Bank to keep interest rates high for longer.

Wall Street has slumped again.Credit: AP

The S&P/ASX 200 was down 37.3 points, or 0.5 per cent, to 7628.2 at the close. Four out of the 11 major industry sectors advanced. The mining sector led the declines with a loss of 1.9 per cent. The consumer discretionary sector was the market bright spot, gaining 0.7 per cent.

The lifters

Shares of Wesfarmers (up 0.6 per cent), Aristocrat Leisure (up 0.9 per cent) and Lottery Corp. (up 0.2 per cent) fuelled the consumer discretionary sector’s gains.

The communication services sector (up 0.4 per cent), healthcare (up 0.3 per cent) and industrials (up 0.3 per cent) also advanced.

Pro Medicus (up 3.6 per cent) was the best performing large-cap stock, followed by Qantas (up 2.7 per cent), GQG Partners (up 2.4 per cent) and Cochlear (up 1.7 per cent).

Shares in beef producer Australian Agricultural Co. rose 2.8 per cent after the federal government confirmed China had lifted its ban on Australian beef exports into the country.

The laggards

Shares in mining heavyweight BHP tumbled 1.9 per cent after the company revealed overnight it had abandoned its $75 billion takeover bid for rival Anglo American, dragging the mining sector lower. Rio Tinto and Fortescue Metals dropped 1.5 per cent and 3 per cent, respectively, adding to the sector’s weakness.

The worst-performing stocks on the local bourse were mostly those of miners or energy companies. IGO shares tumbled 4.4 per cent, Mineral Resources was down 2.9 per cent and Evolution Mining lost 2.8 per cent.

The ASX weakness followed significant equity losses on Wall Street after US bond yields climbed after a second day of poor demand at government debt auctions, and ahead of key US core personal consumption expenditure data that will be released Friday 10.30pm AEST.

The lowdown

Capital senior financial market analyst Kyle Rodda said the higher bond yields were a result of heightened concerns about US deficit financing, rising uncertainty about the inflation outlook, and the market pricing out future US interest-rate cuts because of high inflation.

“The dynamic has weighed on the ASX 200 today,” Rodda said. “Materials have been the biggest [decliner] after a rally in the US dollar weighed on commodity prices. The market bounced off the session’s lows, finding psychological support around 7600.”

The ASX slumped 1.3 per cent on Wednesday after inflation figures for April came in higher than expected.

Consumer prices rose 3.6 per cent year-on-year last month, up from 3.5 per cent in March. The market expected that figure to ease to 3.4 per cent.

The Australian sharemarket has fallen 1.1 per cent in the past three months as hopes for relief on the interest rate front have been pushed out into next year amid stickier-than-expected inflation.

Deutsche Bank chief economist Phil O’Donaghue said an August rate hike by the RBA “remains a material possibility”, but is sticking with his forecast for the central bank to cut rates by 0.25 percentage points in November.

Overnight on Wall Street, the S&P 500 Index dipped 0.7 per cent, trimming its gains for May, which had been on track to be its best month since November. Four out of every five stocks in the index dropped.

The Dow Jones Industrial Average lost 1.1 per cent and the Nasdaq Composite Index slipped 0.6 per cent.

Tweet of the day

Quote of the day

“That is fantastic news for the cattle producers, for the meat processing industry and for the workers in those industries,” Agriculture Minister Murray Watt said after China lifted its import ban on five Australian beef exporters.

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