The Australian sharemarket suffered its biggest fall in one month after Wall Street fell sharply on the back of interest rate concerns, with banks the worst performers on the local bourse.The S&P/ASX200 slumped 1.81 per cent to 7235.3, while the All Ordinaries Index sank 1.82 per cent to 7485.2.
In the US on Friday, the S&P 500 Index and Dow Jones Industrial Average had their worst weekly losses since February and October, respectively, after comments by a Federal Reserve official that interest rates may be hiked sooner than expected, causing jitters among investors, Ord Minnett said.
“The Fed also began talks about slowing its bond-buying program, which has been helping to keep longer-term rates low,” the wealth management group said.
CommSec analyst Steve Daghlian said it came amid global worries that inflation was rising at a faster pace than expected.
“Keep in mind one of the reasons why markets have managed to hit a number of record highs over the past number of months has actually been interest rates at rock bottom levels and that central banks have made it quite clear they have no intention of raising them for a number of years,” Mr Daghlian said.
“Another thing to note is where the market has come from: the Aussie market has just had five consecutive weeks of gains – the longest winning streak of the year – with the Aussie market also hitting record highs on two occasions last week.”
According to CommSec’s Year In Review, the All Ordinaries has so far lifted 27 per cent this year, while the S&P/ASX 200 index is up 25 per cent, with consumer discretionary shares the standout performer (up more than 41 per cent), followed by the financials sector (up almost 40 per cent) and information technology (up about 39 per cent).
On Monday, ANZ dropped 3.11 per cent to $28.08, National Australia Bank backtracked 1.68 per cent to $26.42, Westpac declined 2.72 per cent to $26.15 and Commonwealth Bank gave up 5.43 per cent to $98.06.
CBA announced it will sell its CommInsure general insurance business to Johannesburg-headquartered Hollard Group for $625m upfront plus deferred payments payable when certain business milestones are achieved.
There will be additional investment from Hollard throughout a 15-year strategic alliance, CBA says.
The bank’s decision to offload its insurance business is part of its simplification strategy, which has already involved selling half of its wealth business Colonial First State.
“The market hasn’t taken too kindly to this announcement … It’s the biggest one-day drop the bank has experienced in over 12 months,” OMG chief executive Ivan Tchourilov said.
Bendigo and Adelaide Bank shed 5.32 per cent to $10.33 and Bank of Queensland retreated 4.98 per cent to $8.78.
BoQ announced the Treasurer had cleared its acquisition of ME Bank, with chairman Patrick Allaway saying the deal was “a key step in our strategy to be a compelling alternative to the big banks”.
BHP erased 1.96 per cent to $45.61, Fortescue slid 2.72 per cent to $21.81 and Rio Tinto weakened 2.77 per cent to $120.05 after UBS downgraded the miner to a sell recommendation, from neutral.
UBS said it expects the iron ore price will fall by more than half over the next 12-18 months, from $US200 per tonne to about $US90/t as supply lifts and demand moderates.
Mr Daghlian said miners were the worst performers last week and the decline continued.
“One of the reasons why miners have done quite poorly is the strength of the US dollar, which we’ve had recently on that talk of high interest rates in the United States,” he said.
“That has seen the Aussie dollar fall to pretty much the weakest it’s been against the greenback all year and that in turn has seen commodity prices drop back as well.”
The Aussie dollar was fetching 75.03 US cents, 54.30 British pence and 63.17 Euro cents in afternoon trade.
In the energy sector, Oil Search slid 3.23 per cent to $3.90, Origin retreated 2.88 per cent to $4.73 and Woodside gave up 1.85 per cent to $22.77.
After NSW recorded two new locally acquired Covid cases, travel stocks suffered.
Qantas dropped 3.7 per cent to $4.67, Sydney Airport declined 2.8 per cent to $5.90, Webjet backtracked 2.26 per cent to $5.18, Flight Centre lost 1.74 per cent to $15.83 and Corporate Travel Management shed 1.76 per cent to $21.16.
Some of the few stocks in the green included buy-now-pay-later providers Afterpay and Zip, up 2.46 per cent at $117.21 and 0.86 per cent at $8.21, respectively.
Another was telco Vocus, which announced the Foreign Investment Review Board had approved its acquisition by Voyage Australia, a consortium comprising Macquarie Infrastructure and Real Assets and Aware Super.
The last hurdle is a vote by shareholders at a meeting on Tuesday.
Shares in Vocus, which owns Dodo and Primus, firmed 0.18 per cent to $5.48.

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