Aust shares drop again, snapping four-week win streak

The Australian share market has dropped across the board to post its worst losses in more than three weeks as hopes fade for midyear interest rate cuts.

The benchmark S&P/ASX200 index on Friday fell 84.2 points, or 1.08 per cent, at 7,727.6, while the broader All Ordinaries dropped 83.9 points, or 1.04 per cent, to 7,999.2.

The ASX200 fell 1.11 per cent for the week, having suffered losses every day except Monday, for its first weekly loss since the week ending April 19.

Friday's losses came after a US gauge of business activity known as the Purchasing Managers Index, or PMI, came in much stronger than expected.

Instead of the slight softening that experts had expected, the monthly readout climbed to its highest level since April 2022.

While the report was good news for the US economy, this also suggests that rate cuts might not be required soon to sustain growth, which is unwelcome news for risk assets such as equities.

"Expansive growth is usually a good thing. But not for traders who are positioned for Fed cuts," City Index analyst Matt Simpson wrote.

"With PMIs pointing to firmer growth and potentially another round of inflation, hopes of beloved cuts have quickly evaporated, and - dare we say - concerns of another hike may be brewing."

Expectations for a US rate cut by mid-September dropped further after the report, with the market's pricing the odds at roughly 50-50, according to the CME FedWatch tool.

All of the ASX's 11 sectors finished lower on Friday, with consumer discretionaries down the most, at 2.5 per cent.

Wesfarmers slipped 3.8 per cent to a three-month low of $63.82, Tabcorp dropped 3.9 per cent to 62.5c and IDP Education retreated 4.2 per cent to $16.32.

All of the big four banks finished lower, with CBA down 1.5 per cent to $118.87, NAB drooping 1.3 per cent to $33.96, Westpac falling 1.2 per cent to $26.56 and ANZ dipping 1.0 per cent to $28.11.

In the heavyweight mining sector, BHP fell 0.6 per cent to $44.64 while Fortescue and Rio Tinto each slipped 0.8 per cent, to $26.77 and $132.50, respectively.

The Australian dollar was buying 66.00 US cents, from 66.28 US cents at Thursday's ASX close.

Next week, the Australian Bureau of Statistics will report retail sales figures on Tuesday and April monthly consumer price index on Wednesday.

ON THE ASX:

* The benchmark S&P/ASX200 index on Friday fell 84.2 points, or 1.08 per cent, at 7,727.6

* The broader All Ordinaries dropped 83.9 points, or 1.04 per cent, to 7,999.2.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 66.00 US cents, from 66.28 US cents at Thursday's ASX close

* 103.66 Japanese yen, from 103.82 Japanese yen

* 61.03 Euro cents, from 61.22 Euro cents

* 52.00 British pence, from 52.07 pence

* 108.29 NZ cents, from 108.33 NZ cents.