Tech stocks savaged as ASX drops 1.8pct

·4-min read

Australian technology stocks have suffered their worst single-day losses since early in the pandemic, while the local bourse hit a 14-week low after declining for a fourth day in five sessions.

The benchmark S&P/ASX200 index fell steadily on Thursday to finish nearly on the lows of the day, dropping 123.7 points to 6941, a 1.8 per cent fall. The broader All Ordinaries declined by 137.8 points to 7166.6, a 1.9 per cent drop.

The tech sector plummeted 8.7 per cent, sinking to its lowest level since March 2020. It was the worst day for ASX tech stocks since March 18, 2020, and followed the release of figures showing US inflation still near a 40-year high.

"That inflation reading overnight in the US is a freaking disaster," said Michael McCarthy, chief strategy officer with Tiger Brokers Australia.

"It means central banks' hands are tied - not only can they no longer support markets, they're going to have to lift (interest) rates and withdraw stimulus, and the consequences for asset prices across the board are severe.

"We're likely to see property, shares, cryptos, gold, all asset prices falling as the global pool is drained as central banks pull back on that stimulus."

Growth stocks such as technology companies are particularly sensitive to interest rate changes, as was made clear again with the carnage on Thursday.

Xero fell 11.6 per cent to a two-year low of $76.80, despite the Kiwi cloud-accounting company announcing operating revenue was up 29 per cent to $NZ1.1 billion in the 12 months to March 31.

Block plummeted 17.6 per cent $99.90, its lowest since its shares began trading on the ASX in February with the acquisition of Afterpay.

Chief executive Jack Dorsey has pushed the company towards bitcoin-related business, but crypto has been collapsing in value even faster than traditional equities.

Three ETFs that invest in bitcoin or ethereum actually made their debut on Australia's Cboe on Thursday, a brutal day for cryptocurrencies.

"Couldn't have imagined a more challenging day for Australia's new crypto ETFs to debut," tweeted City Index market analyst Tony Sycamore.

Betashare's Crypto Innovators ETF, which invests in crypto-related companies, dropped 18.8 per cent on Thursday and is down 64.4 per cent on the year.

Other ASX tech names also had a dreadful day, with chipmaking design company Altium falling 16.7 per cent to a one-year low of $25.20, and Wisetech Global dropping 6.9 per cent to a nine-month low of $38.24.

While all of the ASX's 11 sectors were deeply in the red, none dropped nearly as hard as technology. Energy, consumer discretionary and property shares were all collectively down a little over 2 per cent.

The financial sector fell 0.8 per cent, but NAB and CBA managed to gain ground, along with insurance company Suncorp.

NAB rose 1.0 per cent to $30.82 and Commonwealth Bank climbed 0.6 per cent to $102.15 after announcing that its third-quarter cash profit had remained steady at $2.4 billion.

The heavyweight mining sector fell by 1.8 per cent, with BHP dropping 1.6 per cent to $44.95, Rio Tinto down 2.1 per cent to $103.43, and Fortescue dropping 2.8 per cent to $19.01.

Goldminers were also down, with Evolution dropping 3.4 per cent and Northern Star falling 2.8 per cent.

Mining services provider Orica gained 4.7 per cent to $16.40 after announcing its underlying half-year earnings had risen 58 per cent to $245 million.

The Australian dollar declined further, hitting a fresh 22-month low. The Aussie was buying 68.85 US cents, down from 69.71 US cents at Wednesday's close.

ON THE ASX:

The benchmark S&P/ASX200 index finished down 123.7 points, or 1.75 per cent, to close at 6941 on Thursday.

The All Ordinaries index dropped 137.8 points, or 1.89 per cent, to 7166.6.

CURRENCY SNAPSHOT:

One Australian dollar buys:

68.85 US cents, from 69.71 US cents when the ASX closed on Wednesday.

88.87 Japanese yen, from 90.61 yen.

65.78 Euro cents, from 66.04 cents.

56.45 British pence, from 56.50 pence.

110.27 NZ cents, from 110.36 NZ cents.

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