The Australian sharemarket experienced a sharp decline on Wednesday, driven by a multi-decade high in US bond yields and domestic uncertainty following the federal budget. The ASX 200 dropped 1.26 per cent to close at 8496.6, while the All Ordinaries index fell 1.27 per cent, or 112.5 points, to 8717.0.
Global bond yields spark sell-off
The market was rattled by a surge in global bond yields to levels not seen in decades, which offset optimism about a potential resolution to the Iran conflict. Rising energy prices, exacerbated by the war, fueled inflation fears and increased the likelihood of an interest rate hike in the United States.
Gold prices edged down 0.3 per cent to US$4475.06 per ounce, while Brent crude oil fell 1.26 per cent to US$109.88 per barrel after US President Donald Trump announced he was close to ordering an attack on Iran before calling it off.
The Australian dollar strengthened slightly, buying 71.09 US cents, up 0.02 per cent.
Mining and banks under pressure
Eight of the eleven ASX sectors ended in the red, with Materials suffering the steepest decline of 2.12 per cent. Mining giants were among the biggest losers: Rio Tinto shares fell 1.94 per cent to $175.19, BHP dropped 1.89 per cent to $57.59, and Fortescue Metals Group declined 1.55 per cent to $21.54.
All four major banks also recorded losses. Westpac fell 2.42 per cent to $35.51, ANZ dropped 2.11 per cent to $34.77, NAB slipped 0.65 per cent to $36.80, and Commonwealth Bank edged down 0.15 per cent to $162.64.
VanEck market analyst Jamie Hannah noted that housing tax reforms announced in the May 12 federal budget were creating uncertainty for banks. "Changes to the capital gains tax discount and negative gearing could negatively impact the bank to write new loans," he said. "The banks are also under pressure from net interest margins as well as some stretch valuations."
Biggest movers
The worst-performing stock was Siren Gold Limited, which plunged 27.71 per cent to 6 cents. Carnegie Clean Energy also tumbled 24.76 per cent to just under 8 cents.
On the positive side, technology stocks led gains. Catapult Sports surged 17.71 per cent to $3.39. The Consumer Staples sector posted the largest sector gain, rising 0.15 per cent, with Woolworths up 0.88 per cent to $34.51 and Coles gaining 0.77 per cent to $21.51.
Telecommunications fell 1.67 per cent, with REA Group dropping 2.85 per cent to $164.18 and Telstra declining 0.63 per cent to $5.51.
Company news
Webjet shares plummeted 11.2 per cent to 44 cents after Virgin Australia announced it would re-enter the holiday packages business under its own brand from July 1. Webjet had entered a trading halt on Tuesday following the announcement before resuming normal trading on Wednesday.
James Hardie Industries also fell, dropping 0.86 per cent to $26.55 after reporting a 75 per cent slump in full-year profit. The building products company attributed the decline to higher inflation and slower home-building activity in North America.
The market had a volatile start to the week, hitting a seven-week low on Monday before recovering some losses on Tuesday. Wednesday's sell-off underscores ongoing concerns about global interest rates and domestic fiscal policy.
