The Australian share market closed lower on Friday, as investors fretted about the prospect of a 2022 rate hike and US inflation hitting a 40-year high.
The benchmark ASX 200 closed 1 per cent lower, at 7,217, and the broader All Ordinaries fell just over 1 per cent, to 7,515.
Meanwhile, the Australian dollar was down 0.6 per cent, to 71.22 US cents.
Investors were reacting to comments made by Reserve Bank of Australia governor Philip Lowe, who told a parliamentary committee that a rate hike later this year was "plausible."
However, Dr Lowe said moving on interest rates too early could put the country's employment goals at risk, and that the board was prepared to be patient.
“I think just getting one more CPI [consumer price index] is not enough for that evidence to emerge," he said.
That likely rules out a rate hike before the RBA's August meeting.
Rate-sensitive sectors such as real estate and tech were the biggest drags on the top 200 companies index.
The worst-performing companies at lunchtime were IDP Education (-8pc), Zip Co (-7.1pc), Life360 (-6.9pc), Pointsbet Holdings (-6.5pc) and Megaport (-6.5pc).
And the best-performing stocks were Unibail-Rodamco-Westfield (+6.4pc) and Insurance Australia Group (+4.1pc), after higher natural peril claims drove its half-year cash earnings down 62 per cent but still beating estimates. Rio Tinto (+2.9pc), ALS Limited (+2.6pc)and Fortescue Metals (+2.7pc) rounded out the top five.
Afterpay owner Block retreated 3.4 per cent, while Xero lost 4.5 per cent and WiseTech Global also lost about 3.4 per cent.
Gladys Berejiklian joins Optus
Meanwhile, former New South Wales premier Gladys Berejiklian will join Optus in the newly created role of managing director, enterprise, business and institutional.
Optus chief executive Kelly Bayer Rosmarin said Ms Berejiklian would be a "game-changer" for the company.
“Gladys is a proven leader who demonstrated her renowned strength, leadership, discipline, and composure in successfully guiding Australia’s largest state through one of the biggest challenges in its history while earning the support and gratitude of the community for her tireless contribution," Mr Rosmarin said.
"She also builds and fosters loyal and dedicated teams who really go above and beyond for her.”
In a statement released by Optus, Ms Berejiklian said she was excited to work with the team.
“I am excited and proud to join an organisation that impacts the lives of millions of Australians every day and prides itself in providing outstanding customer service."
Ms Berejiklian will join Optus on February 28.
Prosecutors drop cartel charges against Citi, Deutsche Bank
The Commonwealth Director of Public Prosecutions has abandoned a major criminal case against Citigroup, Deutsche Bank and several of of their senior executives -- four years after it first laid charges against them.
The banks and their executives were being prosecuted for alleged criminal cartel conduct.
It is the latest embarrassing blow for the Prosecutor — and the ACCC which conducted the initial investigation.
ANZ was previously a defendant in this matter but all charges were dropped against that bank -- when Federal Court judge Michael Wigney criticised the case as being "a complete shemozzle".
The prosecutor had argued this alleged collusion began in 2015, when ANZ tried to raise extra money - by issuing $2.5 billion worth of new shares.
Deutsche Bank, Citi and another investment bank JP Morgan tried to help ANZ with the fund raising but weren't able to sell ALL the new shares.
So they allegedly came to an understanding on what to do with the remaining shares in breach of competition laws.
JP Morgan was not charged because it blew the whistle and was granted immunity.
Wall Street down on possible rate rise in March
In New York, the Nasdaq Composite fell 2.1 per cent, to 14,185.
The Dow Jones Industrial Average closed 1.5 per cent lower, at 35,241 points, while the S&P 500 lost 1.8 per cent, to 4,504.
The 10-year Treasury yield jumped above 2 per cent. Shorter-term yields also rose sharply. The benchmark 10-year yield was at 1.51 per cent at the end of December.
Investors were reacting to US Labor Department data that showed consumer prices surged 7.5 per cent in the 12 months to January. It marks the biggest annual increase in inflation since 1982.
US stocks deepened their losses after St Louis Federal Reserve Bank President James Bullard, a voting member of the Federal Reserve's rate-setting committee this year, said the data had made him "dramatically" more hawkish.
He told Bloomberg News he was now open to a 50 basis point hike in March, and wanted a full percentage point of interest rate hikes by July 1.
"Inflation tends to be kryptonite to valuations. Higher inflation causes multiples to compress, and that's what we're experiencing right now," said Terry Sandven, chief equity strategist at US Bank Wealth Management.
Within minutes of Mr Bullard's comments, rate futures contracts were had priced an increase in the Fed's target range for its policy rate to 1 per cent, to 1.25 per cent, by the end of June.
Citi economists changed their forecast to a 50-basis-point hike in March.
Joseph Capurso, CBA currency strategist and economist, also expects a 50basis-point rise in March, followed by a 25-basis-point increases in May, June, September and December.
"An important question is how high the FOMC will push the Funds rate in coming years. We have been forecasting a higher peak in the Funds rate compared to market pricing for some time," he said.
The prospect of higher interest rates hit tech stocks, with Tesla down 3.4 per cent, Microsoft fell 2.9 per cent, Google dropped 2.4 per cent and Amazon lost 1.6 per cent.
Meanwhile, US companies continued to report quarterly results.
Twitter rose 1.6 per cent, despite reporting weaker than expected quarterly advertising revenue and user growth fell short of Wall Street targets.
The social networking site said it made "meaningful progress" toward its goal of reaching 315 million users and $US7.5 billion in annual revenue by the end of 2023.
Walt Disney Co rose 3.6 per cent after beating revenue and profit estimates on strong subscriber additions and attendance at US theme parks.
Barbie maker Mattel Inc and cereal maker Kellogg Co gained 7.8 per cent and 3 per cent, respectively, after forecasting full-year profits above market expectations.
Locally, reporting season continues with Arena REIT, Baby Bunting and IAG Insurance releasing interim results today.
Commodities
On oil markets, West Texas crude is down 0.2 cent in late afternoon trading, AEDT, at $US89.67, while Brent was down 0.4 per cent, to $US91.04 per barrel.
Spot gold lost 0.7 per cent, selling for $US1,824.70 per ounce.
Iron ore gained $US7.00 overnight, or 4.8 per cent, to $US153.75 per tonne.
In Europe, the pan-European STOXX 600 index closed 0.2 per cent lower, while Britain's FTSE rose 0.4 per cent, and Germany’s DAX was little changed.
ABC/Reuters
