Stocks drop as rate cut jitters, tech and miners weigh on benchmark

With the benchmark finishing in the red for three of the past four sessions, the sharemarket dipped 1.6 per cent this week.

Australian shares finished the week in negative territory after the benchmark lost further ground on Friday due to a sell off in tech and material stocks.

The benchmark index, the S&P/ASX200, slipped 0.6 per cent to 7773.3 at the closing bell, with all 11 industry sectors sinking into the red. The broader All Ordinaries similarly shed 0.6 per cent.

The Australian dollar lost 0.2 per cent of its value against the greenback to trade at US65.74c.

With the benchmark falling 1.6 per cent over the shortened trading week, investors have been skittish after receiving conflicting economic data and mixed signals from US central bankers on the path of rate cuts.

Overnight on Wall Street, all three major indices finished in the red after Minneapolis Federal Reserve president Neel Kashkari warned that if progress on inflation stalled there was a “possibility” of no rate cuts this year.

Conflicting economic data and comments by central banking officials has altered rate cut expectations in recent days. Picture: AFP / Mandel Ngan

CommSec market analyst Steven Daghlian said expectations regarding rate cuts were “changing on an almost daily basis” at a time when equities were nearing “dizzying heights”.

“It gets easy to rattle markets when there’s either commentary from Fed officials pushing out the first rate cut possibility, or when there’s data that’s disappointing as well,” Mr Daghlian said.

“That’s probably going to continue for the time being.”

Fresh jobs and inflation data out of the United States would provide traders with further clues on the path of interest rates, Mr Daghlian added.

Locally, interest rate sensitive tech stocks were the biggest laggards, skidding 1.4 per cent, as Wisetech and Xero both sank 1.7 per cent to $90.87 and $123.00, respectively.

On the Singapore Exchange, iron ore futures slid 0.8 per cent to $US96.95 per tonne for the May contract, with miners for the key steelmaking tracking lower.

BHP shed 0.9 per cent to $44.35, Rio Tinto slipped one per cent to $120.55, while Fortescue fell 0.7 per cent to $24.78.

Meanwhile, the energy sector was the best performer, unchanged through Friday’s session, as Brent crude futures traded at $US91 per barrel amid fears of a re-escalation of tensions in the Middle East.

“Oil prices look set for further upside in the short term as a more positive economic backdrop is joined by ongoing supply tightness and rising geopolitical risks,” ANZ economists said in a note to clients.

Amid increasing tensions in the Middle East and ongoing tightness in supply, crude oil prices have risen to five-month highs. Picture: AFP / Frederic J.Brown

The bank’s commodity analysts have upped their short-term target for the oil benchmark to $US95 per barrel.

Sector heavyweights Santos added 0.6 per cent to $7.93 while Ampol rallied 0.9 per cent to $41.28.

In company news, shares in St Barbara vaulted 7.9 per cent to 21c after the gold miner reported production of 17,257 ounces of the precious metal in the March quarter, up 33 per cent on the December quarter.

Meanwhile, fellow gold miner Capricorn Metals reported production at its Karlawinda facility of 26,017 ounces for the March quarter, with output affected by the impact of rain at its open pit mine. Shares traded 5.5 per cent lower to $5.19.

Embattled money manager Magellan Financial fell after it reported net outflows of $700m in March, even as total funds under management rose to $37.3bn. Shares sank 3.7 per cent to $9.49.

International assets manager GQG Partners jumped 4.1 per cent to $2.29 as it conversely reported net inflows of $US4.6bn over the March quarter, with total funds under management reaching $US143.3bn.

Human services firm APM extended its trading halt having received a letter of intention from its largest shareholder, Madison Dearborn Capital Partners, regarding a proposed takeover bid. Shares last traded at $1.63.

Originally published as Stocks drop as rate cut jitters, tech and miners weigh on benchmark