Bourse retreats as US Federal Reserve tempers rate cut expectations

After climbing to a record high on Wednesday, the share market lost ground as US Federal reserve chair Jerome Powell warned rate cuts by March were “unlikely”.

The share market snapped its eight-day winning streak on Thursday, tumbling from its record-high after it was weighed down by a flurry of profit-taking and Federal Reserve chair Jerome Powell all but guaranteed US rates would not be cut in March.

At the closing bell, the benchmark was 1.2 per cent, or 92.5 points, lower to 7.588.2, while the broader All Ordinaries had shed a similar amount to 7,818.8.

The Australian dollar extended its losses, edging 0.2 per cent lower to US65.51c.

Wall Street tumbled overnight as traders trimmed their bets that the Fed likely wouldn’t be ready to cut rates in March, as markets were pricing.

The S&P 500 dipped 1.6 per cent overnight, its largest decline since September, and the Dow Jones retreated 0.8 per cent.

US Federal Reserve chair Jerome Powell signaled Wednesday that an interest rate cut as soon as in March was unlikely. Picture: AFP / Julia Nikhinson

Meanwhile, the tech-heavy Nasdaq plunged 2.2 per cent as all of the Magnificent Seven stocks fell into the red, with Alphabet missing analysts’ forecasts.

TMS Capital portfolio manager Ben Clark said markets in Australia and the United States were still tightly correlated with the outlook for interest.

“Jerome Powell has obviously tried to push back on the expectation that rates are going to get cut in March. He’s still I think trying to keep a grip on inflation and the tight monetary policy they’ve got at the moment,” Mr Clark said.

“It’s just a bit of a reality check that governors are still trying to get inflation back under control and maybe rate cuts are a month or two later than the markets are expecting.”

US 10-year treasury yields dived 13 basis points to 3.93 per cent.

Locally, all 11 industry sectors were in the red, with financials the worst performing, down 1.8 per cent, following warnings from US and Japanese lenders of their exposure to bad debts in commercial real estate.

Australia's four big banks Commonwealth, Westpac, NAB and the ANZ all dipped in Thursday’s trade. Picture: NCA Newswire

The ‘big four’ banks all retreated. Commonwealth Bank slid 2.9 per cent to $114.10, NAB sank 2.2 per cent to $31.90, and Westpac dropped 1.7 per cent to $23.77, and ANZ fell 1 per cent to $26.92.

In company news, mixed miner IGO sank 4.2 per cent to $7.24 after it was served a royalty claim by South32 requesting that it pay back royalties worth $122m from its operations at its Tropicana Gold Mine located in WA. IGO announced it will defend the claim.

After-pay parent Block fell 2.3 per cent top $100.50 after it foreshadowed redundancies across its operations.

Agricultural chemicals manufacturer Nufarm slumped 1.1 per cent to $5.52 after it announced that challenging conditions across the cropping industry for the first half of 2024 due to excess inventory and higher cost of goods, impact margins.

Automotive parts retailer Bapcor announced Paul Dumbrell as its incoming chief executive and managing director, effective May 1. Its former chief Noel Meehan will step down from the role in coming days. Shares climbed 1.2 per cent to $5.71.

Metcash shares were in a trading halt as it confirmed it was in talks to buy Superior Food in a deal worth a rumoured $500m.

Originally published as Bourse retreats as US Federal Reserve tempers rate cut expectations