ASX traders sell as rate expectations rise

A second-half fade for the ASX caused by rising bond yields has reminded investors higher interest rates could dominate 2022.

The Australian market turned from gains to losses on Tuesday as higher bond yields led investors from the risk of shares.

The Australian government 10-year bond yield rose to 1.93 per cent.

Investors are preparing for the US Federal Reserve to raise rates several times this year to slow surging inflation.

IG Markets analyst Kyle Rodda said Wall Street investors were back trading after a public holiday and alert to the central bank hiking rates.

The US 10-year bond yield rose to 1.85 per cent and Mr Rodda said this filtered through to global markets.

Higher US yields supported the greenback. The Aussie dollar fell below 72 US cents.

The US Federal Reserve is due to meet next week although most analysts expect rate hikes to begin in March.

ASX investors may also have been discouraged by consumer confidence figures.

The ANZ-Roy Morgan poll tumbled to its lowest level since October 2020 as consumers worried about surging coronavirus infections and deaths.

The benchmark S&P/ASX200 index closed lower by 8.5 points, or 0.11 per cent, to 7408.8 points.

The All Ordinaries index lost 3.5 points, or 0.05 per cent, to 7735.8 points.

Materials shares were the best performers. They rose about half a per cent after losing about one per cent the previous day.

The poorest performers were healthcare shares. They lost 1.23 per cent.

Among individual stocks, there were big moves among retail ones such as JB Hi-Fi.

Shares in the electronics group gained almost seven per cent to $49.84 after second-quarter sales improved.

First-half profit is forecast to be down almost 10 per cent although the period included temporary store closures brought on by COVID-19.

Online creative marketplace Redbubble fell 22.41 per cent to $2.32 after revealing first-half profit was likely to drop. Competition and higher shipping costs were blamed.

Technology shares were a little higher but shopping provider Kogan was not one of them, dropping 7.13 per cent to $7.42.

Among larger stocks, mining giant Rio Tinto forecast greater iron ore exports in 2022 and is assuming the worst of the pandemic is over for its workers.

The company tipped exports of the steel-making commodity would increase from 322 million tonnes in 2021 to a range of 320 million tonnes to 335 million tonnes this year.

The forecast is based on there being no more highly contagious virus variants which could make many workers sick or needing to isolate.

Shares were down 0.35 per cent to $109.65.

BHP fared better and rose 1.19 per cent to $46.70. Fortescue lost 0.1 per cent to $20.75.

Ampol's Lytton refinery in Brisbane is on course for its best quarterly earnings in more than four years.

The refinery's profit margin and production have improved since the federal government began paying a fuel security subsidy to the company last year.

Ampol was up 2.39 per cent to $31.27.

Financials were a little lower and most big banks slipped a little. Bendigo Bank was an improver and gained 0.65 per cent to $9.33.

Technology services group Data#3 had good news and said first-half earnings were likely to be in the top end of its forecast range.

First-half net profit before tax and earnings per share were likely to be up 30 per cent.

Shares were higher by 14.46 per cent to $6.65.

The Australian dollar was buying 71.95 US cents at 1716 AEDT, lower from 72.06 US cents at Monday's close.

ON THE ASX

* The benchmark S&P/ASX200 index closed lower by 8.5 points, or 0.11 per cent, to 7408.8 points on Tuesday.

* The All Ordinaries index lost 3.5 points, or 0.05 per cent, to 7735.8 points.

* At 1716 AEDT, the SPI200 futures index was down five points, or 0.07 per cent, at 7310 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 71.95 US cents, from 72.06 cents on Monday

* 82.65 Japanese yen, from 82.48 yen

* 63.15 Euro cents, from 63.12 cents

* 52.77 British pence, from 52.69 pence

* 106.18 NZ cents, from 105.92 cents.