Tech sell-off drags ASX down, Reserve Bank expected to hike interest rates in May

Australian shares have dropped for a third straight trading day, after a technology sell-off on Wall Street intensified in the final hour over fears of a slowing economy and aggressive US interest rate hikes.

The ASX 200 index had fallen 0.7 percent to 7,268 points, by 12:20 pm AEST on Wednesday.

The Australian dollar rose to 71.5 US cents, shortly after the Bureau of Statistics (ABS) confirmed the biggest inflation spike in two decades.

Consumer prices shot up by 2.1 percent in the March quarter.

It also means the cost of living has surged by 5.1 percent in the past year, its biggest jump since June 2001 – around the time the GST was introduced.

There is now an 86 percent chance the Reserve Bank will lift the cash rate target when it next meets on May 3, according to market pricing.

If the RBA proceeds with a pre-election rate hike, this would be the firrst time it has happened since 2007 (when John Howard lost to Kevin Rudd).

Meanwhile, some of the blue-chip companies suffering the heaviest losses on the ASX were Qantas (-3.1pc), A2 Milk (-3.3pc), Graincorp (-2.5pc) and ANZ (-2.1pc).

However, tech-related stocks were the worst performers, including Block (-6.9pc), Zip Co (-5.1pc), Life360 (-7.5pc), Pointsbet (-6.6pc) and Tyro Payments (-6.3pc).

EML Payments plunged 9.9 percent (on top of yesterday’s 38.6 percent slump), following the company’s payment profit downgrade.

YouTube’s ad revenue was $ US6.9b in the March quarter, which missed expectations.(Reuters: Dado Ruvic / Illustration)

Google and YouTube reveal the impact of war

Shares in Google’s parent company, Alphabet, tumbled as the war in Ukraine and inflation concerns led to its advertising revenue falling below Wall Street’s lofty expectations.

In after-hours trade, its stock fell by 2.7 percent (on top of its 3.6 percent slide during the US trading session overnight).

The war in Ukraine had an “outsized impact” on Alphabet’s video streaming service YouTube – because it stopped ad sales in Russia and brand advertisers, (particularly in Europe) scaled back on spending, according to the company’s chief financial officer Ruth Porat.

She also told analysts that 1 percent of Google’s overall sales came from Russia last year.


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