The technology sector was a sea of red after worrying data spooked investors and felt the sharemarket to a five-month low.
Any relief ASX investors enjoyed on Wednesday was blasted away in a tech sector wipeout which took the local sharemarket to its lowest close since January.
The local bourse was a sea of red on Thursday following a worrying inflation report that spooked traders on each side of the Pacific.
All sectors suffered as the ASX 200 benchmark summarized its three-week nosedive with a 123.7 point, or 1.8 percent, loss to 6941.0 – its weak finish in just under five months.
The broader All Ordinaries index shed 137.8 points, or 1.9 percent, to 7166.6.
The market is now 8.6 per cent lower than when it was flirting with record highs on April 21 and fast approaching the 10 per cent drop that would make the current fall an official correction.
Much like in the US, local technology stocks were savaged.
Afterpay owner Block Inc plunged 17.6 per cent to $99.90, while accounting software firm Xero slumped 11.6 per cent to $76.90 – its lowest since early 2020.
Altium dropped 16.7 per cent to $25.20, Megaport dropped 9.7 per cent down to $6.58, Airtasker dropped 8.9 per cent to 41 cents, Wisetech Global dropped 6.9 per cent down to $38.24 and Zip Co was 6.5 per cent lower at 93.5 cents.
Appen, Computershare, NextDC and market operator ASX Ltd each fell by between 2 per cent and 4 per cent.
When the dust settled, the local all-technology index was back to where it was in May 2020, when the market was recovering from the unprecedented Covid-19 selloff.
The trigger for Thursday’s market crash was the latest US consumer price data, which showed inflation lingering at stubbornly high levels in April.
This, in turn, seemed to convince investors that even steeper interest rate hikes will be required in the months ahead, something that a week ago appeared to be off the table.
“At this point, I don’t care what the reasons are, inflation’s too high, and my job is to get it down,” US Fed Board Member Chris Waller said overnight.
“That means we have to raise rates. We have to cool off demand and try to get inflation pressures down.
“If we get some help from supply chain resolution, that’s fantastic. But I’m not counting on it.”
As is typical when inflation is high and steeper rate hikes loom, growth stocks were badly affected both home and abroad.
In the US, this included an 8.3 per cent dive for Elon Musk’s Tesla, a 5.2 per cent drop for gadget maker Apple, a 3.2 per cent fall for Amazon and a 6.4 per cent decline for Netflix.
Fellow Nasdaq giant Meta Platforms fell 4.5 per cent, Microsoft was down 3.3 per cent and Google parent Alphabet lost 0.5 per cent.
The Aussie dollar also sank on Thursday, drooping to near two-year lows and lingering around 68.83 US cents at the local close.
City Index analyst Tony Sycamore said this showed exactly where jittery investors were putting their money.
“Where is the cash going? The dollar is king!” he said.
“(It is going) into US cash and longer duration fixed income US products which also offer the benefit of still positive real yields.”
Healthcare companies – many of which are valued on their future earnings potential – were also victims of the Thursday selloff.
Blood and plasma giant CSL ended 1.8 per cent lower at $271.18, with Cochlear losing 2.7 per cent to $20.59, Resmed 2.6 per cent lower at $27.67 and Fisher and Paykel losing 4 per cent to $18.45.
The big mining companies initially showed resistance, but they too were eroded away.
BHP finished 1.6 per cent down to $44.95, Rio Tinto lost 2.1 per cent to $103.43 and Fortescue Metals was 2.8 per cent lower to $10.01.
Commonwealth Bank lifted 0.6 percent to $102.15 and NAB gained 1 percent to $30.82, but there wasn’t much else to cheer about in the financial sector.
Westpac dropped 1.9 per cent to $23.79 and ANZ was 1 per cent lower to $25.16, while Macquarie Group slumped by 3.8 per cent to $175.21.
Originally published as Markets wrap: Australian stocks slump to five-month low as inflation worries shift up a gear