The US slump, coming on top of continued concerns over the potential widening of the war in Ukraine, looming central bank rate hikes and worries about slowing growth in China, Australia’s major trade partner, heaped pressure on the local market that it could not shrug off.
The benchmark ASX 200 index finished down 88 points, or 1.2%, to 7,347, while the broader S&P/All Ordinaries (ASX: XAO) fell by 101.2 points, or 1.3%, to 7,623.6.
The tech stocks led the decline, with a 4% drop, rattled, like their US counterparts, by expectations of aggressive monetary tightening by central banks.
WiseTech Global Ltd (ASX: WTC) dropped 7.3% to $41.97, Xero Limited (ASX: XRO) gave up 6.6% to $90 after touching its lowest level since August 2020, and Tyro Payments Ltd (ASX: TYR) slid 5.6% to $1.19.
But the dubious honour of biggest loss in the ASX tech index was Aussie Broadband Ltd (ASX: ABB), which plunged 28.1% to $4 after downgrading its full-year earnings guidance.
Interest-rate rise today not a done deal
The market posted a slight recovery later in the day after unofficial figures from the Melbourne Institute showed inflation easing in April, which could prompt the Reserve Bank of Australia to wait for more data before lifting the cash rate; we will know today, but money market pricing shows that expectations for a rate hike today have fallen a little.
Many investors are bracing for what could be the RBA’s first cash rate increase in more than a decade, but there is also a school of thought among RBA-watchers that the bank does not want to hike rates during the election campaign, and would also prefer to wait for further data, particularly wages growth.
ASX travel shares the one bright spot
Travel was a rare winner, with a faster-than-expected recovery in domestic tourism supporting the sector.
Qantas Airways Limited (ASX: QAN) was up 2.9% to $5.76 after the national airline said it was seeing a “strong, sustained recovery in travel demand as Australia transitions to living with COVID” and that it expects to return to profitability next financial year.
Qantas said better-than-expected revenue had enabled it to reduce its net debt to $4.5 billion, from a peak of $6.4 billion at the worst of the pandemic-induced border closures.
The upbeat, third-quarter update predicted that underlying earnings in the six months to June 30 would come in between $450 million and $550 million, well ahead of analysts’ estimates.
Qantas’ renewed confidence was backed by travel agency group Helloworld Travel Group Ltd (ASX: HLO), which told the market that its bookings were up 60% in the March quarter from ayear ago, to $419 million.
Elsewhere, natural gas producers Beach Energy Limited (ASX: BPT), Karoon Energy Ltd (ASX: KAR) and Origin Energy Ltd (ASX: ORG) were all up as gas prices surged to a 14-year high, following Russia stopping deliveries to Poland and Bulgaria.
Wall Street claws back some of Friday’s losses
US markets started the job of recovering from Friday’s awful session, led by the tech-heavy Nasdaq Composite Index, which gained 1.6%, with much of that coming in the final hour of trading.
The S&P 500 rose 0.6% after dropping 3.6% on Friday, its biggest single-day decline in two years.
But the S&P 500 is off to its worst start to a year since 1939, falling more than 13% to the end of April.
The 30-stock Dow Jones Industrial Average eked out an 84.3-point rise, or 0.3%, to 33,061.5.