ASX slumps as bond market rattles Wall Street, oil prices jump

The Australian sharemarket plunged in early trade on Thursday, as oil prices rallied back over the $US100-a-barrel mark and a surprisingly strong report on the US economy sent bond yields sharply higher.

The S&P/ASX 200 was down 113.30 points, or 1.3 per cent, at 8652 as of 10.50am AEST, having closed flat in the previous session. Australia’s unemployment data for August will be released at 11.30am AEST, with investors looking for clues for the Reserve Bank’s next steps on interest rates. The central bank’s board convenes to decide on rates next week.

Last month, Australia’s unemployment rate rose to 4.5 per cent , which was its equal highest for the past five years. RBA governor Michele Bullock said this week an unemployment rate of “between 4.5 and 5” per cent would probably be needed to “ease” inflationary pressures.

The morning’s losses were paced by the mining and financial heavyweights, which account for more than half of the ASX. Copper and iron ore giants BHP and Rio Tinto fell 2.6 per cent and 1.3 per cent, respectively. Gold producers also suffered as bullion prices fell as renewed strength in oil prices reinforced bets that the Fed will raise interest rates to fight inflation. Northern Star fell 2.6 per cent, and Evolution Mining dropped 1.9 per cent.

The big four banks were all down sharply, with Commonwealth Bank losing 2.2 per cent, National Australia Bank down 2.3 per cent, Westpac down 2.2 per cent and ANZ down 2.1 per cent.

Real estate investment trusts also struggled in the face of the looming rate hikes, which makes them less attractive in the face of bonds’ rising returns. Data centre and warehouse owner Goodman Group fell 2.1 per cent and Westfield shopping centres landlord Scentre dropped 1.2 per cent.

Other interest-rate-sensitive sectors such as consumer discretionary and tech stocks also declined. Officeworks and Bunnings owner Wesfarmers lost 1.8 per cent and furniture seller Harvey Norman dropped 1.2 per cent, while on the tech front, software maker WiseTech shed 1.1 per cent and AI data centre operator NextDC slumped 2.8 per cent.

Nine Entertainment, the owner of this masthead, plunged 8.3 per cent after it said Amanda Laing, the managing director of its streaming and broadcast unit, is leaving after less than two years in the job. The surprise move came a day after the media group said Australian Financial Review editor-in-chief James Chessell was leaving to join independent media website Rampart .

Premier Investments jumped 3.3 per cent even after the owner of chains such as Smiggle and pyjama brand Peter Alexander said its overall profits more than halved to $129.2 million as parents pulled back on buying Smiggle’s stationery for children in the cost-of-living crisis. Total revenue fell 2.1 per cent to $795.5 million.