Communication services was the poorest performing major sector, as CAR Group fell 3 per cent and Seek fell 1.3 per cent.

The lowdown

The ASX 200 lost 1.7 per cent this week. AMP deputy chief economist Diana Mousina noted that the benchmark is up only 1.8 per cent so far this year.

“We expect the ASX 200 to return 9 per cent this year, and at end the year be around 7900. A recession is probably the main threat,” she said.

Commenting on the economy, HSBC chief economist Paul Bloxham said economic growth has almost stalled and inflation was too high and falling only slowly.

“The RBA has only a modestly tight stance of policy, which has slowed demand, rather than sharply weakened it. The aim has been to keep the economy close to full employment while still delivering disinflation,” he wrote in a research note to clients.

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“We expect the RBA to [keep interest rates] on hold in June, judging that its policy setting is moving the economy in the right direction just quickly enough to bring inflation back to its target by mid-2026.”

Overnight on Wall Street, the S&P 500 Index added 0.2 per cent to post another record high, even though the majority of stocks comprising the index weakened.

The Nasdaq Composite Index climbed 0.3 per cent – another record – thanks to gains in key technology stocks, while the Dow Jones Industrial Average fell 0.2 per cent.

Treasury yields eased in the bond market as conviction built that inflation is slowing enough for the US Federal Reserve to cut interest rates later this year.

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The latest update on inflation in the US showed prices paid at the wholesale level were not as bad as economists expected. While economists were forecasting a rise, prices dropped from April into May.

It followed a surprising update Wednesday that showed inflation at the consumer level was lower than expected. Fed chair Jerome Powell called that report encouraging and said policymakers need more such data before lowering their main interest rate from the most punishing level in two decades.

The yield on the 10-year Treasury bond fell to 4.24 per cent, from 4.32 per cent. The two-year yield, which moves more on expectations for the Fed, fell to 4.69 per cent, from 4.76 per cent.

Quote of the day

“Gambling companies should always be paying their fair share ... the NSW government will apply strict scrutiny to Tabcorp’s proposal. Change will happen if it’s clear the public will be better off.” That’s NSW Treasurer Daniel Mookhey, who said the state government was considering raising the tax on all betting in NSW.

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With AP