ASX SLIDES AFTER RISING BOND YIELDS RATTLE INVESTORS
INVESTORS wiped $51bn off the local sharemarket after Wall Street slumped, as rising bond yields “sparked fear across equity markets”.
The ASX 200 finished
2.35 per cent lower at 6673.3 points, while the All Ordinaries Index slumped 2.32 per cent to 6940.6. The Aussie dollar dived 2.3 per cent to a five-day low of US78.20c.
CommSec analyst Steven Daghlian said the local bourse had a rough run, suffering its worst day in about five months with a broad sell-off across all sectors. “It’s been a volatile few weeks for our market, which has had a bit to do with movements in the bond market globally,” he said.
In New York, the S&P 500 fell 2.5 per cent and NASDAQ slumped 3.5 per cent.
Axi chief global market strategist Stephen Innes said US 10-year bond yields were up a whopping 17 basis points to 1.54 per cent — the highest level in a year. He warned a rise in the long-term bond yield had sent risk tremors through markets previously. “As US bond yields continue to march higher, this continues to suggest the heavily weighted tech sector could be on the cusp of a very unpleasant near-term valuation test,” Mr Innes said.
“Tech stocks are susceptible to rising yields because their value rests most heavily on future earnings, which get discounted more negatively when bond yields go up.”
On the Australian market, buy now, pay later provider Afterpay dropped 11 per cent to $119.52.
Explosives maker Orica announced Alberto Calderon would step down as managing director and chief executive, sending its shares plunging 18.1 per cent to $12.56.
AMP was one of the star performers. Its shares rallied 7.5 per cent to $1.50 after it reached an agreement to sell 60 per cent of AMP Capital’s private markets business to global asset manager Ares Management Corporation.