ASX drops, tech plunges on rate fears

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The Australian equity market started the day lower, but fared better than the huge losses inflicted on Wall Street overnight.

The ASX was down 0.76% on Wednesday after soaring bond yields in the United States helped decimate markets there.

ASX tech stocks fared the worst and fell more than 2% after the Nasdaq suffered a similar beating.

Network provider Megaport plunged 12.47% to $15.99 after investors were unconvinced by its December quarter performance.

Electric car battery producer Novonix fell 8.81% to $9.31.

Energy shares were the best and were about 1% higher.

Oil prices rose on concerns about political tensions between producers in the United Arab Emirates and Russia.

Health care and financial services were the other most struggling stocks. Each lost a little more than one percent.

The selloff comes after U.S. Treasury yields hit two-year highs overnight as traders brace for the Federal Reserve to hike rates.

The US central bank wants to slow inflation and has a meeting next week. However, most are expecting a first rate hike in March.

The benchmark S&P/ASX200 fell 56.9 points, or 0.76%, to 7351.9 points at 1200 AEDT.

The All Ordinaries Index was 59 points, or 0.76%, lower at 7,676.8 points.

The Westpac-Melbourne Institute’s monthly consumer sentiment index fell just 2% in January despite the latest coronavirus outbreak which has disrupted the economy.

Westpac chief economist Bill Evans said it was a surprisingly strong result.

In company news, BHP improved iron ore exports in the December quarter but warned of coronavirus concerns once Western Australia eases rules on visitors from of February 5.

Miners exported 73.2 million tonnes of iron ore in the quarter, more than the 70.7 million tonnes in the same period a year earlier.

BHP fell 0.27% to $46.57.

Among major iron ore rivals, Fortescue fell nearly 2% to $20.35. Rio Tinto did better by 0.40% at $110.09.

Financial stocks had a weak lead in the US where Goldman Sachs missed quarterly earnings expectations.

Shares of Australia’s biggest banks were all down. The Commonwealth fared the worst of the big four and fell 1.45% to $99.32. Bendigo Bank was down around 2% at $9.14.

Afterpay shares were trading for a final day on the ASX before the company merged with US payments giant Block. Afterpay fell 1.16% to $67.16.

Elsewhere, CIMIC Group has won a tunnel contract from the NSW Government as a joint venture.

CPB Contractors, a subsidiary of CIMIC, and John Holland will dig the Western Harbor Tunnel in Sydney.

CPB will reap approximately $350 million in revenue.

CIMIC fell 0.86% to settle at $17.17.

The Australian dollar was buying 71.87 US cents at 1200 AEDT, down from 71.91 US cents at Tuesday’s close.

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