Australian share market drops to 2023 low as tech stocks plummet

The benchmark sank to its lowest level of the year so far as interest rate sensitive stocks tumbled on increased odds of a November rate hike.

The Australian share market fell to its lowest point of the year on Thursday after a mixed result from US tech giants overnight pushed Wall Street lower.

The benchmark S & P/ASX200 lost 0.6 per cent, or 42 points, to 6,812.3, weighed down by interest rate sensitive tech stocks which dropped 2.6 per cent. The broader All Ordinaries fell 0.6 per cent to 7,001.1.

On Wall St overnight, the benchmark S & P/500 shed 1.4 per cent, while the tech-heavy Nasdaq fared worse, sinking 2.4 per cent after mixed profit results. Google’s parent company Alphabet sank 9.5 per cent while Microsoft rose 3.1 per cent.

Alphabet stocks lost nearly 10 per cent of value after its cloud business suffered. Picture: AFP / Angela Weiss

Locally, tech heavyweights Xero, fell 2 per cent to $106.30, Wisetech dropped 1.9 per cent to $58.80, and Megaport tumbled by 16.3 per cent to $9.63 after an underwhelming September quarter result.

Meanwhile, utilities stocks were the best performers, rising 1.3 per cent.

The $A sank to a one-year low of US62.73c intraday after Reserve Bank governor Michele Bullock made her first appearance before Senate estimates.

Ms Bullock said the bank was still assessing higher-than-expected inflation data, released on Wednesday, which showed CPI increased to 1.2 per cent in the September quarter, up from 0.8 per cent in June.

“We have to look at whether or not it’s material enough to change our views on,” she said.

Appearing before Senate estimates, RBA governor Michele Bullock left open the door for a November rate hike. Picture: NCA NewsWire / Martin Ollman

Westpac economists, who had previously forecast a rate hold at the central bank’s November meeting, revised their forecast on Thursday.

“Inflation is declining, but not fast enough for the RBA to hold rates unchanged, given their recent rhetoric,” freshly minted Westpac chief economist Luci Ellis said in a note to clients.

“We assessed that it would take a significant upside surprise to induce the RBA board to raise rates at the November meeting. A 0.1 per cent difference might not seem like a lot, but the underlying detail was sobering.

“So, yes, I’ve seen enough to make my first-ever rate call to be a prediction of a hike.”

Ms Ellis formerly served as RBA assistant governor and replaced Westpac’s long standing chief economist Bill Evans earlier this month.

Westpac chief economist has switched the bank’s rate hike prediction for RBA’s Melbourne Cup Day board meeting. Picture: NCA NewsWire / Monique Harmer

RBC Capital Markets, head of Australian equities, Karen Jorritsma said following Ms Bullock’s parliamentary appearance markets were primed for a November rate hike.

“Markets made peace with the fact that we were through the worst of the rate environment, and the market had found some comfort in that,” Ms Jorritsma said.

“I suspect now, markets are going to start picking up that concern that [rate hikes] aren’t over.”

In company news, Pilbara Minerals slumped 0.5 per cent to $3.86 after it announced its September quarter figures were 42 per cent lower than June. Blaming weaker lithium prices and falling production volumes, the firm has dropped plans for a share buyback or special dividend.

Supermarket giant Coles rose 0.2 per cent to $14.98 after reporting $9.18bn revenue result in Q1.

Fortescue Metals Group rose 0.9 per cent to $22.21. The increase came despite news that the iron ore miner shipped 45.9 million tonnes of the commodity out of Port Hortland in the September quarter; down from 48.9 million tonnes in June.

Originally published as Australian share market drops to 2023 low as tech stocks plummet