Australian shares sold off in a disastrous start to a new week as investors absorbed the Federal Reserve chairman’s comments last week.
Tech stocks led the declines as investors fled risk assets, and the sector cratered 4.4 per cent. The benchmark SP/ASX 200 index fell 2 per cent, or 138.6 points, to 6965.5, while the broader All Ordinaries index, which includes the largest 500 companies, dropped 2.1 per cent, or 152.4 points, to 7193.4.
“We’ve got a year-end target for the ASX 200 of 7000, so a little bit of steam coming out of the equity market makes sense. We’re still in a backdrop whereby earnings estimates are being cut, and economists are still expecting the economy to slow down further and interest rates to go higher.” Traders also revised their expectations of how high the Reserve Bank of Australia will raise rates after Mr Powell’s speech. The cash rate is now forecast to top 4 per cent by July next year. At Friday’s close, traders were betting the cash rate would peak at a lower 3.8 per cent.Broad declines came after Powell’s speech to the annual cental bankers’ meeting in Wyoming last week.
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