The Australian share market fell for the second day in a row to a one-month low, after US stocks slumped as investors brace for higher US interest rates.
In Australia, nearly all sectors ended in the red, with the falls led by technology stocks, after a sell-off on Wall Street.
Other sectors weighing on the local market were banks, miners, healthcare and telecommunications firms.
All the big banks were weaker, with the Commonwealth Bank (-1.5pc) falling the most.
Utility firms rose and energy stocks gained as oil prices rose to a seven-year high.
Brent crude oil was higher, at $US88.52 a barrel, in afternoon trade, while spot gold fell nearly 0.1 per cent, to $US1812.06 an ounce.
The All Ordinaries index fell 1 per cent, to 7,657, while the ASX 200 index dropped by the same percentage, to 7,333.
Today's best performers in the ASX 200 index were artificial intelligence firm Appen (+3.9pc), electronics retailer Harvey Norman (+3pc), and retailer Premier Investments (+2.8pc).
Going down were data centres operator Megaport (-16.2pc) after it posted the slowest quarterly revenue growth since March, battery materials firm Novonix (-9.7pc), and lithium chemicals firm Allkem (-6.7pc).
BHP warns of COVID impact
Big miner BHP said it achieved near-record production of iron ore in Western Australia, despite bad weather and COVID-19 train driver shortages.
Iron ore production rose 1 per cent over the six months to the end of December, compared to the same time last year.
Output increased 4 per cent over the quarter.
Iron ore production was affected by labour shortages because of COVID restrictions.
BHP warned that the planned easing of Western Australia's border restrictions could cause some short-term disruption to operations.
It also said workforce absenteeism in Queensland at its coking coal operations, arising from COVID-19, was expected to continue.
Yesterday, rival Rio Tinto said COVID-19 had also disrupted its operations.Wet weather saw production of thermal coal, used for power, fall by nearly one third from the September quarter to the December quarter.
Copper production fell 12 per cent, coking coal production declined 8 per cent, and nickel output dropped 15 per cent over the half year.
BHP shares dropped 0.3 per cent, to $46.56, while Rio Tinto rose 0.2 per cent, to $109.91.
Investors will vote tomorrow on BHP's plan to unify the company under a single primary listing in Sydney and delist from the London Stock Exchange.
Lynas charters ship to combat supply squeeze
Rare earths miner Lynas said revenue from sales jumped to a record over the December quarter, thanks to strong demand for supply, despite challenges related to COVID-19.
Rare earths oxide production increased by one third.
Amid supply chain delays, the company said the transit time for concentrate shipped from Fremantle Port to Kuantan Port in Malaysia increased from 15 days in March 2021 to 33 days in December last year.
"Many supply chains are yet to return to normal and we see this continuing for some time," the company told the ASX.
It said it had chartered a ship to transport concentrate to Malaysia because the additional cost was outweighed by "the benefit of ensuring continuity of supply to customers."
It has also been using air freight.
The company processes rare earths in Australia, but is awaiting environmental approval for a plant in Kalgoorlie in Western Australia.
Lynas shares fell 1.1 per cent, to $10.97.
Dixon Advisory goes under
Investment firm Dixon Advisory has filed for voluntary administration.
The firm is facing class actions by investors, claims against the company filed with the Australian Financial Complaints Authority, and a $7.2 million fine by the corporate regulator for breaches of the Corporations Act.
Dixon Advisory was accused of not acting in the best interests of clients by failing to provide appropriate financial advice.
Its parent company, E&P Financial Group, told the ASX it had appointed Pricewaterhouse Coopers partners Stephen Longley and Craig Crosbie as voluntary administrators.
E&P managing director Peter Anderson said the appointment of an administrator had become necessary because of the increasing number of claims against Dixon and its financial liabilities.
"It has also become apparent that settling individual claims as they arise will likely lead to inequities between client creditors," Mr Anderson said.
"Voluntary administration provides an appropriate framework to ensure all client creditors are treated equitably."
E&P said Dixon clients would be transferred to a replacement investment advisor of their choice and a deed of company arrangement would be prepared to settle all claims.
Bond yields rise
Yields on Australian government bonds followed their US counterparts higher on expectations that the US Federal Reserve will raise interest rates at its March meeting.
The return on the 10-year bond rose to 2.01 per cent for the first time since October last year.
Meanwhile, the Australian dollar was steady, at 71.87 US cents, at 4:00pm AEDT.
Consumer confidence falls
Westpac and the Melbourne Institute said consumer sentiment fell 2 per cent in January, to 102.2, amid the rapid spread of the Omicron variant of COVID-19.
It compares to a 7.6 per cent drop in confidence seen last week by ANZ and Roy Morgan.
Westpac said it was a surprisingly solid result, given the impact of Omicron and optimists still outnumbered pessimists.
The 2 per cent fall compares to a 17.7 per cent collapse in confidence when the pandemic first hit in early 2020.
Optimism increased in New South Wales and Victoria, but saw significant falls in Queensland, Western Australia and South Australia.
Economic data from the Australian Bureau of Statistics showed that the total number of home building commencements fell by 16.3 per cent from the June to September quarters.
However, dwelling starts were still up by nearly one third over the year.
US stocks sold off
Wall Street tumbled as interest rates on government bonds surged and investment bank Goldman Sachs reported disappointing earnings.
Investors expect the US Federal Reserve to start raising interest rates soon to curb rising global inflation.
Data last week showed US consumer inflation at a 40-year high.
Technology stocks fell because higher interest rates hurt growth stocks, which rely on cheap borrowing to expand.
Goldman Sachs lost as much as 8 per cent after the investment bank missed quarterly profit expectations amid weak trading activity.
The Dow Jones index lost 1.5 per cent, to 35,369, the S&P 500 lost 1.8 per cent, to 4,577 and the Nasdaq fell 2.6 per cent, to 14,507.
At the same time, the yield on two-year US Government bonds rose above 1 per cent, the first time since February 2020, a month before COVID-19 was declared a pandemic.
The yield on the benchmark 10-year bond rose to 1.86 per cent, the highest since January 2020.
Rising bond yields are a sign of higher borrowing costs.
In economic news, the Empire Manufacturing Index, which measures manufacturing in New York state, went backwards for the first time since early 2020 when the pandemic hit.
The index fell 33 points in January, to minus 7 points, which indicates that activity slowed as Omicron cases rose.
Oil prices near seven-year high
Oil prices climbed to the highest since October 2014 as investors worried about global political tensions that could worsen tight supply.
Major producers group OPEC kept to its forecast for strong fuel demand in 2022, despite the spread of the Omicron COVID-19 variant and expected interest rate rises.
Supply concerns mounted after Yemen's Houthi group attacked the United Arab Emirates with drone and missile strikes that killed three people.
"The damage to UAE oil facilities in Abu Dhabi is not significant in itself, but raises the question of even more supply disruptions in the region in 2022," said Rystad Energy's senior oil markets analyst Louise Dickson.
And concerns that Russia will attack neighbouring Ukraine is also increasing tension.
OPEC countries are struggling to pump at their allowed quotas under the agreement between OPEC, Russia and allies to add 400,000 barrels per day each month.
They are hoping to restore production to pre-pandemic levels by late 2022.
European markets
In London, the FTSE 100 index fell 0.6 per cent, to 7,564, the DAX in Germany lost 1 per cent, to 15,773, and the CAC 40 in Paris fell 1 per cent, to 7,134.
ABC/Reuters
