ASX falls most in three months

Australian stocks suffered their biggest one-day fall in over three months as the S&P/ASX 200 tumbled away from a record high.

Australian stocks had their worst day in over three months as cracks appeared on Wall Street after strong gains in the past two months.

A day after hitting an over-two-year high of 7632.7 points, Australia’s S&P/ASX 200 index dived 104.56 points or 1.4 per cent to close at a five-day low of 7523.2.

It follows a 0.6 per cent fall in the S&P 500 on Tuesday amid sharp falls in the “Magnificent Seven” tech giants including Apple, Meta Platforms and NVIDIA.

In percentage terms it was the biggest one-day fall in the S&P/ASX 200 since 27 September.

On Tuesday the S&P/ASX 200 rose 0.5 per cent to 7627.8 points, just below its record closing high of 7628.9 reached in August 2021.

The local market had soared almost 13 per cent in about nine weeks from October 30 to January 2, tracking a rise in the US market amid expectations of rapid-fire interest rate cuts in the US after a “dovish pivot” by the Fed.

All sectors of the Australian market fell on Wednesday.

Bell Potter head of institutional sales and trading Richard Coppleson said Wednesday's fall “was not really a big deal” in the context of its recent gains.

“The real question is will the drop extend further, and if so, how far before those who have missed it and are long cash ‘buy the dips’,” he added.

Tech, property, materials and communications sectors fared worse than the benchmark index.

Heavyweight iron ore miners, banks, health care and property stocks did most of the damage with BHP down 1.5 per cent, CBA down 1.3 per cent, CSL down 1.2 per cent, Goodman Group down 3.2 per cent, Macquarie Group down 1.7 per cent, Fortescue down 1.9 per cent and Rio Tinto down 1.4 per cent.

BHP, CBA, Fortescue and Rio Tinto shares had hit fresh record highs in recent days.

Iron ore miners fell on Wednesday despite a further rise in iron ore prices amid expectations of supply tightness and hopes of policy stimulus from China after a recent speech by President Xi Jinping.

Singapore iron ore futures were up 0.6 per cent at $US142.65 per tonne after hitting a 21-month high of $US143.50.

Wednesday’s fall in the Australian share market came after a tech-led sell-off in the US market as Barclays downgraded Apple to an “underweight” rating, citing disappointing iPhone 15 sales, particularly in China.

The 10-year bond yield rose 5 basis points to 3.93 per cent as traders trimmed bets of US rate cuts.

Japan’s market remained closed for holidays.