ASX200 declines on China-led banking, tech rout

A sharp rout in banking and tech stocks pushed the Australian sharemarket into the red on Tuesday, even as the heavyweight mining sector soared higher on renewed Chinese stimulus hopes.

The benchmark ASX200 fell 30 points, or 0.36 per cent, to close at 8393, while the broader All Ordinaries index retreated 37 points, or 0.43 per cent, to 8650.

The All Technology index tumbled 3.55 per cent to 3881.5, while the Aussie dollar lost 0.67 per cent to buy US63.9c at the closing bell.

The sell-off was broadbased, with eight of 11 industry sectors ending in the red, led by IT with a hefty 4 per cent slump and financials, which tumbled 1.74 per cent.

News from China propelled the rout on both fronts.

The Middle Kingdom has announced a probe into US chip giant Nvidia, triggering a 2.55 per cent decline in the world’s most valuable company overnight on Monday and driving a 0.62 per cent decline in America’s tech-heavy Nasdaq index.

Australia’s tech darlings followed Wall Street’s lead, with Xero tumbling 4.37 per cent to $170.99 a share, WiseTech Global falling 4.36 per cent to $125.60 and Megaport slumping 5.35 per cent to $7.43.

The banks were pummelled as investors pulled profits and rotated into resources on the prospect of fresh Chinese stimulus measures.

Chinese policymakers flagged a “more proactive” fiscal policy and “moderately loose” monetary settings on Monday afternoon.

“They gone from prudent to ‘moderately loose’,” IG markets analyst Tony Sycamore said.

“That is significant because that is the terminology they last used during the 2008-09 financial crisis.

“The general consensus is that they really are going to do something this time.

“So you’ve got overpriced banks, healthcare stocks have run very well, it’s probably a good time now to put some money back into the materials stocks because they are trading relatively cheap.

“And if China does do what it has alluded to doing and how we are interpreting this statement, it could be a very bullish development for resource stocks.

“Certainly more upside in resource stocks here than in banks, if we do see the Chinese follow through on that statement.”

Commonwealth Bank retreated 1.1 per cent to $157.63, Westpac slumped 1.92 per cent to $32.24, ANZ lost 1.83 per cent to $29.48 and NAB declined 2.81 per cent to $37.64.

The big miners all soared, with BHP jumping 3.05 per cent to $41.83, Rio Tinto lifting 4.85 per cent to $125.28 and Fortescue surging 6.23 per cent to $20.45.

Mineral Resources was the benchmark’s top performer, climbing 8.69 per cent to $37.16.

Lithium and coal companies also booked handsome gains, with Pilbara Minerals gaining 6.51 per cent to $2.29 and Whitehaven Coal adding 3.48 per cent to $6.55.

The market bounced higher in afternoon trade to pare some losses from its intraday low of 8360 points as investors digested dovish rhetoric from the Reserve Bank of Australia.

The Board held rates steady at 4.35 per cent but said it was “gaining some confidence” inflation was moving “sustainably towards target”.

In corporate news, investment fund Perpetual Group was the benchmark’s worst performer, slumping 8.4 per cent to $20.07 after flagging a larger-than-expected potential tax bill from its proposed acquisition of Kohlberg Kravis Roberts.

“The previously advised range … of between $106m and $227m is now estimated to be between $493m and $529m and the estimated cash proceeds to shareholders for the transaction would reduce from $8.38 to $9.82 per share as previously communicated to $5.74 and $6.42 per share,” the company said in a statement.

Insurance giant IAG fell 1.73 per cent to $8.50 after announcing it would defend itself against a class-action lawsuit in the Victorian Supreme Court.