Shares have had a mid-session collapse on the Australian market after New Zealand’s central bank hiked rates due to rising prices.
The ASX went from gains to losses on Wednesday, as investors reacted to the RBNZ decision to raise rates to 0.5 per cent.
The RBNZ said while there was still economic uncertainty from coronavirus, cost pressures were becoming more persistent.
IG Markets analyst Kyle Rodda noted the cost pressures observation was different to the forecasts of other central banks.
The US Federal Reserve has claimed elevated inflation would be temporary amid the recovery from the pandemic.
The ASX200 lost about 40 points in the minutes after the RBNZ decision and continued sliding lower.
However, ThinkMarkets analyst Carl Capolingua was unsure the decision was entirely responsible for the falls.
The rate rise was in line with expectation, he said.
Trade in Asian markets looked pretty lousy, Mr Capolingua said, and the ASX was likely following the region and US futures.
US job figures for September are due at the end of the week and will be a main performance indicator of the world’s biggest economy.
Analysts expect about 473,000 jobs have been added.
ASX technology shares were one of only two categories to improve and followed the US recovery overnight.
Afterpay gained almost three per cent to $116.98 a day after shedding five per cent.
Energy shares performed well a day after OPEC stuck to an existing pact for a gradual increase in oil output.
Merger partners Oil Search and Santos each gained more than two per cent.
The biggest falls were in consumer discretionaries and travel.
Flight Centre and Webjet each lost more than six per cent.
The benchmark S&P/ASX200 index closed lower by 41.9 points, or 0.58 per cent, to 7206.5.
The All Ordinaries closed down 40.3 points, or 0.53 per cent, to 7496.2.
Shareholders in A2 Milk have filed a class action alleging the company gave misleading earnings forecasts which caused them financial loss.
The New Zealand milk supplier has lowered its earnings forecast four times since September last year as infant formula sales flagged in China.
Shares were trading for about $16 in September last year but have steadily fallen.
Shares closed down more than seven per cent to $6.02.
Aussie Broadband has raised $20 million through a share sale.
The company in September raised $114 million from a share sale to professional investors.
The NBN plans provider will use the funds to develop new technologies and for mergers.
Shares were down 1.22 per cent to $4.85.
The heavyweight banks were all lower. The Commonwealth Bank fared worst and fell almost two per cent to $103.42.
The big miners were mixed. BHP gained 0.36 per cent to $36.65. Fortescue and Rio Tinto shed less than one per cent each.
Ship builder Austal gained 3.21 per cent to $1.93 after winning a US Navy deal worth almost $A200 million.
The company will build two towing, salvage and rescue ships.
The Australian dollar was buying 72.65 US cents at 1721 AEDT, the same as at Tuesday’s close.
ON THE ASX
* The benchmark S&P/ASX200 index closed lower by 41.9 points, or 0.58 per cent, to 7206.5 on Wednesday.
* The All Ordinaries closed down 40.3 points, or 0.53 per cent, to 7496.2.
* At 1721 AEDT, the SPI200 futures index was down 12 points, or 0.17 per cent, at 7165 points.
One Australian dollar buys:
* 72.65 US cents, from 72.65 cents on Tuesday
* 81.17 Japanese yen, from 80.67 yen
* 62.72 Euro cents, from 62.58 cents
* 53.38 British pence, from 53.39 pence
* 104.87 NZ cents, from 104.66 cents.