ASX 200, tech slumps amid US rate hike fears

The market fell for a second day with all 11 sectors in the red as the index’s cracking start to the New Year looks to be short lived.

Australian shares have tracked a sell-off on Wall Street as traders start to price in a March US rate hike. Picture: NCA NewsWire / James Gourley

Australian stocks tumbled, led by a rout in technology firms amid fears that the US will hike interest rates sooner than what is priced into the market.

The market fell for a second day on Thursday, with all 11 sectors in the red. The benchmark ASX 200 index declined by 207.50 points, or 2.74 per cent, to finish the session at 7.358 after a dip on Wednesday that followed Tuesday’s near five-month high.

The broader All Ordinaries fell by 220.30 points, or 2.79 per cent, to close at 7.697 points, while the Australian dollar took a slight hit to be worth 71.72 US cents

Technology stocks led the retreat, after a sell-off on Wall Street sent the Nasdaq down by more than 3 per cent.

Tech giant Afterpay suffered for a second day in a row, with its shares falling by 10.76 per cent, leading a downturn of other big names in the sector including Xero, WiseTech and Life 360, which all dropped by more than 6 per cent.

Shares in lithium batteries player Novonix fell by almost 7 per cent, just two days after it gained the most out of many strong performers as the ASX soared.

Pinnacle Investment Management shares had the biggest hit of the day, falling by 13.14 per cent to $13.68.

Traders were also concerned that the US would withdraw monetary stimulus sooner than anticipated, removing a powerful tailwind that has propelled tech stocks globally.

Bitcoin also tumbled, pacing a broad retreat in cryptocurrencies.

Minutes from the US Federal Reserve’s recent policy meeting signalled growing unease about higher inflation and a possible interest rate hike in March.

Some officials also believe that the central back should soon start shrinking its $US8.76 trillion portfolio of bonds and other assets, the minutes showed.

“Investors have been given a wake-up call,” said CommSec chief economist Craig James.

“The minutes of the last meeting suggest that policymakers have become more hawkish. That is, they are highlighting the scope for a faster removal of monetary stimulus.”

Uranium miner Paladin Energy topped the Australian market with a 1.6 per cent rise, but it wasn’t enough to offset the energy sector’s 2.5 per cent downturn.

Materials fared the best of any sector, but still suffered an overall drop despite Rio Tinto gaining 0.7 per cent to $101.21, copper miner Oz Minerals rising by o.6 per cent to $28.95 and BHP increasing by a modest 0.12 per cent to $42.68.

Just eight companies secured gains on the index, including a rare health sector win by Clinuvel Pharmaceuticals, whose shares rose by 0.41 per cent to $26.88.

Openmarkets Group chief executive Ivan Tchourilov said tech suffered the biggest single-day fall since February last year and there was not much positive news found elsewhere in the market.

The global rout in tech stocks has also said to be exacerbated by the most intense selling by hedge funds since the financial crisis.