Australian sharemarket tumbles as interest rate hikes loom

The Australian sharemarket sank to its lowest levels in 10 months, with most sectors in the red and experts warning volatility is set to rage on.

The benchmark S&P/ASX200 index closed 1.77 per cent lower at 6838.3, while the All Ordinaries Index plunged 1.84 per cent to 7114.5.

“The volatility that we’ve got at the moment is likely to continue, partly because markets are getting used to the idea of rising interest rates this year,” CommSec analyst Steven Daghlian said.

“The (US) Fed outlined its intentions to raise interest rates soon, signalling a potential rate hike in March.

“This would make it the first hike in the United States as far as rates go since 2018 and this is due to 40-year high inflation.”

The prospects of a sooner rather than later rate hike in Australia mounted substantially on Tuesday when underlying inflation rose by 2.6 per cent over the year – above the mid-point of the Reserve Bank’s 2-3 per cent target band for the first time since mid-2014.

OMG chief executive Ivan Tchourilov said the ASX started strong with an upward trend before gains were wiped out.

All sectors except energy and utilities lost ground.

“IT, consumer discretionary and communication services are some of the heaviest hit sectors,” Mr Tchourilov said.

Tradie marketplace hipages Group Holdings tumbled 15.96 per cent to $2.79 after reporting the Omicron strain had dented subscriptions growth in the December quarter, trimming recurring revenue growth.

Online retailer Kogan slumped 12.27 per cent to $6.15 after advising Covid-related consumer demand fluctuations had smashed its first half earnings.

But Premier Investments lifted 2.07 per cent to $27.10 after saying it will close four stores in Sydney’s Mid-City Arcade, starting with Peter Alexander, Smiggle and Portmans in March and Just Jeans by no later than July 2023.

“These closures demonstrate the group’s previously announced intention to walk away from stores where landlords seek rents which are unrealistic,” the Solomon Lew-led retailer said.

In the IT sector, Wisetech Global dropped 9.85 per cent to $43.31, while Codan Ltd fell 10.23 per cent to $8.78.

“Mining and materials could not avoid the sell-off,” Mr Tchourilov said.

Gold producer Evolution Mining slumped 11.28 per cent to $3.46, making it the worst performing stock in the ASX200, after its quarterly report showed lower output.

“The company attributes this to heavy rain at the Cowal and Mt Rawdon projects (in NSW and Queensland) and a labour shortage at its Mungari mine in WA,” Mr Tchourilov said.

Resolute Mining shed 8.33 per cent to 27.5 cents, with the gold producer having slid every session for the past week, he said.

Fortescue inched two cents lower to $19.48 after S&P Global Ratings gave it an ESG (environmental, social and governance) rating of 66, just below the average score of 67.

Rio Tinto gained 2.06 per cent to $109.29 and BHP lifted 1.42 per cent to $45.67.

Commonwealth Bank Global Markets Research said oil prices lifted overnight on supply concerns as markets continued to worry about the prospect of armed conflict between Russia and Ukraine.

“Russia accounts for about 10 per cent of global oil supply,” it said.

“After deducting local demand though, around 8‑8.5 per cent of global oil supply is at risk if Russia’s oil exports are targeted via sanctions.”

Woodside advanced 2.49 per cent to $24.73, Santos rose 3.57 per cent to $6.96 and Beach Energy leapt 8.8 per cent to $1.42.

Woodside announced it had decided to withdraw from Myanmar, where it has operated since 2013, after a military coup almost one year ago.

The oil and gas producer put all business decisions in the country under review following the declaration of a state of emergency.

Chief executive Meg O’Neill said the company could “no longer contemplate” working in Myanmar, where human rights atrocities continued.

ANZ put on 1.12 per cent to $27.07, Commonwealth Bank dropped 1.75 per cent to $93.78, National Australia Bank backtracked 0.37 per cent to $27.25 and Westpac shed 0.25 per cent to $20.16.

Mr Tchourilov said Genworth Mortgage put in a strong performance with a 13.76 per cent jump to $2.48.

“This came off the back of this morning’s announcement that it had been chosen as the exclusive provider of lenders mortgage insurance to Commonwealth Bank,” he said.

The Aussie dollar was fetching 70.75 US cents, 52.61 British pence and 63.04 Euro cents in afternoon trade.