The laggards

Losses by the mining heavyweights and the big four banks weighed on the local bourse, with iron ore giants BHP and Rio Tinto down 1.2 per cent and 1.4 per cent, respectively. CBA, which is the biggest stock on the Australian sharemarket, shed 2.2 per cent while the National Australia Bank dipped 2.1 per cent. Westpac lost 1.8 per cent and ANZ slipped 0.8 per cent.

Real estate stocks also declined, mirroring losses by their counterparts in the US, as rising bond yields helped knock down stocks that tend to get hurt by higher interest rates, such as big dividend payers and businesses in the housing industry. Stockland fell 2.4 per cent, Lendlease Group lost 2.6 per cent and Dexus shed 2.5 per cent.

Other tech stocks continued to suffer, with Xero down 2.1 per cent and NextDC falling 2.4 per cent.

Mineral Resources fell for a second day after confirming it had launched an investigation into an alleged tax evasion scheme involving its billionaire founder Chris Ellison, following undeclared payments made to companies owned by the tycoon. The stock slumped 4.3 per cent, having tanked 12 per cent on Monday.

One of the session’s biggest losers was medtech firm Next Science, which plunged 35.9 per cent after revealing its cash flow slumped 21 per cent in the latest quarter, leaving it with just $US1 million in cash on hand at the end of last month. However, the company said it expects things to improve, predicting it would be cash flow positive by the end of March.

The lowdown

IG market analyst Tony Sycamore said the local sharemarket had been “poleaxed,” suffering its “worst session since its 150 point free fall in early September”.

Impacting the ASX 200 are higher US Treasury yields, which increased as the market factored in a higher chance of former US president Donald Trump winning the presidential election.

“A whopping 67 per cent of the ASX200 has a heightened sensitivity to interest rates/yields,” Sycamore said in a note.

On Monday, the S&P 500 slipped 0.2 per cent, coming off a sixth straight winning week, its longest such streak of the year. The Dow Jones dropped 344 points, or 0.8 per cent, from its own record that was likewise set on Friday, while the Nasdaq composite rose 0.3 per cent.

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Trading was mixed in markets around the world. Crude oil prices rose to regain some of last week’s sharp losses, while US Treasury yields climbed and stock indexes mostly fell in Europe after finishing mixed in Asia.

The declines mean at least a pause in Wall Street’s rally to records, which was built in large part on optimism that the US economy can make a perfect escape from the worst inflation in generations, one that ends without a painful recession that many investors had worried could be inevitable. With the Federal Reserve now cutting interest rates to keep the economy humming, the expectation among optimists is that stocks can rise even further.

Markets appear to be rotating towards a possible Trump win, according to Michael Wilson and other strategists at Morgan Stanley. They point to how stocks of financial companies have helped to lead the market this month, and consumer companies that could be hurt by tariffs are lagging. Bond yields are also rising, along with some precious metals prices and cryptocurrencies.

Tweet of the day

Quote of the day

“These are absolutely ambitious targets. But having ambitious targets is no reason for us not to go after them.”

That’s AGL chief executive Damien Nicks, who said the Albanese government’s target for renewables to supply 82 per cent of the grid’s electricity by the end of the decade must not be abandoned if the Coalition wins the election.

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So it really felt like the end of an era this week, when the Federal Court handed down the parameters for compensating 1700 ground handlers illegally sacked by Qantas during the pandemic.

Columnist Elizabeth Knight has more on how the unions branded Joyce an industrial relations terrorist – but had significant support from many in the industry who believed the unions were holding the company to ransom with threats of ongoing industrial action.

With AP