Markets wrap: ASX tech stocks smashed as traders brace for RBA interest rate hike

ASX investors were back-pedalling from the get-go on Monday after a brutal sell-off on Wall Street knocked tech shares sharply lower.

Technology groups and real estate trusts were savaged on Monday as ASX traders took a cue from a week-ending Wall Street slump and braced for interest rate hikes on both sides of the Pacific.

The benchmark S&P/ASX 200 sank by as much as 1.8 per cent early on as traders dumped shares in Xero, Wisetech Global, Block Inc, Appen, EML Payments, and Altium, mirroring a dire sell-off for the growth-oriented Nasdaq on Friday.

The local index managed to trim its losses in the afternoon but still finished the day down 88 points, or 1.2 per cent, at 7347.0, with all sectors in the red.

The broader All Ordinaries lost 101.2 points, or 1.3 per cent, and settled at 7623.6, while the Aussie dollar had sagged to 70.47 US cents at the local close.

ASX investors were back-pedalling from the opening bell after US stocks plunged on Friday in anticipation of a 50 basis point rate rise from the US Fed in a couple of days.

There was little joy to be had on the local sharemarket on Monday. Picture: NCA NewsWire / David Swift

Amazon stocks were particularly bruised after a disappointing set of financial results, while soft outlooks for Apple and Facebook prompted further tech sector selling beyond the usual blow dealt to growth stocks when monetary policy is tightened.

While no doubt also sweating over Covid lockdowns in China and the war in Ukraine, of more immediate concern to local traders was the Reserve Bank of Australia, which on Tuesday is widely tipped to accelerate its plans for monetary settings and make its first interest rate increase in 12 years.

Governor Philip Lowe is at almost unbackable odds to pull the trigger and hike rates by 15 basis points to 0.25 per cent in order to help the economy get a handle on runaway consumer prices.

Governor Philip Lowe is at almost unbackable odds to pull the trigger on Tuesday and hike rates.

Betashares ETFs senior economist David Bassanese is among the myriad of warket watchers who believe last week’s red-hot CPI print essentially made the RBA’s decision for it, although he said there remained a couple of unknown elements.

“(It) makes that call easier – though it remains to be seen whether the RBA will still hesitate, either due to election sensitivity or because it really does want to wait for confirmation of also accelerating wage inflation before acting,” Mr Bassanese said.

“To my mind, if the RBA does raise rates tomorrow, it should and likely will be only 15bps – it does not need to shock the economy with a 40bps move straight off the bat.”

Whether it was the weak Wall Street lead – or the prospect of rates being lifted from emergency settings – there was little joy to be had on the local sharemarket.

Tech stocks were predictably smashed, with Block Inc dropping 2.2 per cent to $142, Xero down 6.6 per cent to $90, Wisetech Global 7.3 per cent lower at $41.97, and Appen 4.5 per cent down at $6.36.

Altium dropped 4.4 per cent to $31.43, EML Payments was 3.8 per cent lower at $1.54, Tyro Payments shed 5.6 per cent to $1.185, and Megaport lost 5.5 per cent to $8.20.

Real estate trusts were also badly hurt.

Healthcare shares fared little better, with CSL down 1 per cent to $270.45, Sonic Healthcare dropping 1.9 per cent to $36.02, Cochlear 2.2 per cent lower at $226.57, and Resmed 1.4 per cent down at $28.73.

Real estate trusts were also badly hurt ahead of the looming RBA meeting.

Storage and warehousing company Goodman Group dropped 7.2 per cent to $22.26 and National Storage was 2.3 per cent lower at $2.55, while office landlords Dexus, GPT, and Charter Hall were also battered.

There was a 2.7 per cent decline for mall owner Scentre Group to $2.91, a 1.7 per cent loss for Mirvac to $2.38, a 2.1 per cent decline for Vicinity Centres to $1.835, and a 1.4 per cent fall for Stockland to $4.10.

Soft activity data in China released over the weekend due to Covid lockdowns knocked most mining stocks lower, although Rio Tinto managed a 0.7 per cent gain to $113.59.

Travel stocks also proved one of the rare bright spots in the market after Qantas announced it was set to return to profitability while also issuing a further message of confidence with an order for $7bn worth of new domestic and international aircraft.

Shares in the national carrier ended 2.9 per cent higher at $5.76 and dragged travel broker Flight Centre 1.8 per cent higher to $22.99, Helloworld 2.6 per cent higher to $2.73, and Webjet up 1.2 per cent to $6.10.