Shares in high-growth tech, health and payment names took a beating on Tuesday as local investors braced for US inflation data to hit fresh 40-year highs overnight.
Soaring bond yields, lingering lockdown concerns in China and ongoing supply constraints combined to stoke inflation jitters – even as crude oil prices eased – with traders home and abroad again turning away from growth-orientated names.
Investors dumped healthcare stocks and abandoned tech luminaries such as Wisetech Global, Megaport, Appen, EML Payments, while buy-now-pay-later challenger Zip Co lost 5.7 per cent to close at a more than two-year low $1.32.
All sectors ended in the red as the benchmark ASX 200 lost 31.2 points, or 0.4 per cent, to close at 7454.0, touching a two-week low in the process.
The broader All Ordinaries finished 37.7 points, or 0.5 per cent, down at 7735.5 while the Aussie dollar was hovering around 74.30 US cents at the local close.
A fifth straight decline for the local technology sector echoed movements in the US overnight, where there were heavy falls for the likes of Tesla, Apple, Amazon and Microsoft.
The flight away from growth came after the US 10-year note yield reached its highest level since December 2018 at 2.8 per cent, signalling investors are concerned inflation has run too strongly.
IG Markets analyst Hebe Chen said an inflation print that comes out hotter than the expected 8.4 per cent annual rise may force the US Fed to fight price pressures at all costs, even if it means risking sending the US economy into recession.
City Index analyst Tony Sycamore shared similar concerns, noting the current pattern was similar to that seen in January when surging yields wiped 15 per cent from the tech-heavy Nasdaq.
“We hold the view that ‘an already troubling backdrop is deteriorating’ for US stock markets as the Fed tries to tighten monetary to tame inflation, while at the same time attempting to engineer a soft landing,” Mr Sycamore wrote in a note.
“(These are) a gentler version of the thoughts echoed by former Fed President Bill Dudley, who said at the end of last week, ‘One thing is certain: To be effective, the Fed will have to inflict more losses on stock and bond investors than it has so far.’”
A fifth straight decline for the local technology sector featured a 0.4 per cent decline for Afterpay owner Block Inc to $163.80 and a 0.3 per cent loss for Xero to $101.17.
Wisetech fell 2.2 per cent to $47.34, Appen was 3.1 per cent lower at $6.35, altium shed 1.3 per cent to $32.88, Megaport was 4.7 per cent down at $11.92 and EML payments dropped 3.6 per cent to $2.66.
Among health stocks, blood giant CSL was 1.3 per cent down at $261.97 and Resmed fell 3.4 per cent to $32.05.
Pro Medicus ended the day 2.9 per cent lower at $47.12, Fisher and Paykel dropped 2.3 per cent to $21.03 and Cochlear was 0.9 per cent down at $222.42.
Iron ore giant BHP gained 0.1 per cent to $51.72 and Rio Tinto was up 0.5 per cent to $118.09 to offset losses somewhat, although most of the shine on the local market was coming from the gold miners.
Northern Star added 1.4 per cent to $10.82, Evolution was up 2.5 per cent to $4.50, St Barbara gained 2.8 per cent to $1.465 and Regis Resources climbed 4.7 per cent to $2.21 as investors turned to the precious metal as an inflation hedge.
There was, however, little else to cheer about at the top end of the market, with each of the Big Four banks ending the day lower.
ANZ was the worst of the lot with a 1 per cent fall to $27.42, while Commonwealth Bank dropped 0.2 per cent to $106.71, NAB ended 0.1 per cent down at $32.94 and Westpac shed 0.4 per cent to $24.14.
Macquarie Group gained 0.6 per cent to $203.13.