ASX predicted to slide

THE Australian sharemarket is set for another negative start on Monday following weak overseas leads, but oil majors and gold miners could provide some relief to stem the losses.

Ahead of a busy week, SPI futures are pointing to a 0.7 per cent fall at Monday’s open, besting the declines seen on the S&P 500 and the Dow Jones on Friday, with iron ore miners among those set to move lower.

It comes after more than $50bn was wiped from the benchmark S&P/ASX200 index on Friday, as the twin spectres of soaring inflation and tightening interest rates hit the market.

Technology stocks have borne the brunt of the sell-off in recent weeks and it was no different on Friday, when, locally, the Info Tech index slid 4.5 per cent. In the US, the Nasdaq tumbled 1.4 per cent in the day’s trade, bringing its loss for the year to date to 23 per cent.

“We’re going to see a weaker session again on Monday on the ASX and it makes sense that technology and consumer discretionary are the sectors that are being singled out,” CommSec chief economist Craig James told The Australian.

“The expectation is interest rates are going up in most parts of the world and what that means is less scope for economic growth, and that affects the technology sector. And if consumers end up cutting back on spending, it’s more likely to be in non-essential goods or discretionary-type goods.”

Iron ore majors could also come under pressure following a decline in the iron ore price, which fell 4.7 per cent to $US138.44 on Friday amid ongoing Chinese demand concerns.

Oil majors, meanwhile, should shine following a jump in crude prices as the EU moves closer to sanctions on Russian oil.

Brent rose 1.34 per cent to $US112.39, while US West Texas Intermediate gained 1.39 per cent to $US109.77.

Gold miners should also benefit from a lift in the gold price which rose $US7.10 an ounce to $US1882.80.

On Friday there were broad falls across the Australian sharemarket, with the benchmark S&P/ASX 200 index falling 159.1 points, or 2.2 per cent, to close at 7205.6 points — a two-month low.

The market fell 3.1 per cent for the week, marking the third consecutive weekly loss and also the worst week since October 2020 which saw a 3.9 per cent loss.

The slide was led by falls in the key Info Tech index, down 4.5 per cent, Real Estate index, down 3.37 per cent and Financials, down 1.99 per cent.

The local sharemarket is down 5 per cent year to date compared to the Dow Jones’ 10 per cent slide and the S&P 500’s 14 per cent.

Global stocks mostly tumbled on Friday to conclude a volatile week as investors fretted over inflation and worries about slowing growth despite a solid US jobs report.

Looking ahead, Australian business and consumer confidence surveys are expected in the coming days, alongside data on overseas arrivals and departures and new home sales.