Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


ASX sees biggest one-day rout since September 2020

Morningstar with AAP  |  06 Jan 2022Text size  Decrease  Increase  |  
Email to Friend

Australian shares had their biggest one-day fall since September 2020 as investors panicked about interest rates rising sooner than expected. The market lost 2.74 per cent on Thursday and all share categories dropped after minutes of the US Federal Reserve December meeting showed discussion about earlier rate hikes to slow inflation.

Technology shares were most affected and plunged 6.37 per cent. The biggest ASX technology company, Afterpay, lost more than 10 per cent to $71.85. Financial software vendor Xero and cargo management vendor WiseTech Global each lost close to seven per cent.

Property shares were next most affected and lost 4.43 per cent. There were losses of a little more than three per cent for the healthcare, consumer discretionary and telecommunications categories.

S&P/ASX 200 1-Day Change, 06 January 2022

S&P/ASX 200 Index

Source: Morningstar

The widespread selling followed US markets closing lower. The Nasdaq dropped more than three per cent. RBC Capital Markets' US economist Tom Porcelli said the Federal Reserve was responding to inflation expectations that bordered on unhinged. He said the US central bankers were more worried about inflation than anything else. "The market is right to think a March (rate) hike is nearly a done deal," he said.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

CommSec chief economist Craig James said investors received a wake-up call from the Federal Reserve. "They are highlighting the scope for a faster removal of monetary stimulus," he said of the policy-makers.

The widespread selling led the benchmark S&P/ASX200 index down 207.5 points, or 2.74 per cent, to 7358.3 points. The All Ordinaries index closed lower by 220.3 points, or 2.79 per cent, to 7679.3 points. REA Group and Seek were among major big name casualties. Each lost about seven per cent.

In company news, lender and credit provider Latitude offered to buy the consumer business of buy now, pay later provider Humm Group for about $335 million. The payment will consist of 150 million Latitude shares and $35 million cash. Latitude is offering Humm Group chief executive Rebecca James a role leading the combined business. Latitude shares rose 1.78 per cent to $2.0, while Humm shares gained 2.23 per cent to 91 cents.

The big banks followed the market and extended their losses during trade. The Commonwealth was worst and dropped 3.13 per cent to $99.97. NAB lost about two per cent while ANZ and Westpac shed a little more than one per cent.

Materials shares were the best performers and lost 1.45 per cent. BHP and Rio Tinto each gained less than one per cent. Fortescue dipped by about one per cent to $19.75.

Morningstar with AAP.

© 2022 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend