The Aussie sharemarket was on track to have its worst day since May 2020 earlier today, but bounced back from its lows this afternoon. The ASX 200 still slumped by 3.55 per cent or 246pts to 6686, dragging the index to a 16-month low in the process. All sectors finished lower for the 14th time this year. The Industrials, Financials and Energy sectors all had their worst declines in around two years. However, defensive Consumer Staples and Utility companies managed to recover from an early sell-off.

The catalyst for today’s losses was a hotter than expected US inflation update last Friday, with prices rising at the fastest pace in 41 years. This has raised the prospect of a potentially super-sized 75-basis point rate hike by the US Federal Reserve on Wednesday (US time). Since the release of the US inflation numbers, the S&P 500 index has shed 6.7 per cent, the Dow Jones index has fallen by 5.4 per cent and the Nasdaq index has lost 8 per cent. Our market also played catch-up with global bourses, as the ASX was shut on Monday to observe the Queen’s Birthday holiday.

In economic news today, according to the Australian Institute of Petroleum (AIP), the national average unleaded petrol price rose by 2.1 cents a litre last week to 199.0 cents a litre. Prices have risen in seven of the past eight weeks. Business confidence numbers were also released today. As measured by the National Australia Bank (NAB), business confidence eased by 4.1 points to +6 points in May.

The number of residential homes rose by 45,000 in the quarter to an all-time high of 10.8 million. The mean price of Aussie residential dwellings was $941,900 at the end of March, up by 1.8 per cent
over the quarter and 19.8 per cent higher on a year ago.

In company news today, Lynas Rare Earth Resources (LYC) signed a follow-on contract for ~US$120 million with the US Department. of Defense, to establish a “commercial Heavy Rare Earths separation facility in the US”. The facility is targeted to be operational in FY25. Shares of LYC finished 0.5 per cent lower today.

Pro Medicus (PME), a health imaging company, has signed two contract renewals with US customers at a combined value of A$47m. Its contract with Sutter Health has been renewed by seven years, and its contract with Wellspan Health has been renewed by five years. Shares of PME finished 5.5 per cent lower today.

7.9bn shares were traded, worth $13.8bn. 142 stocks finished higher, 1,589 ended lower, while 212 closed unchanged.

In the US, the Federal Reserve begins a 2-day meeting. Data on producer prices is released with the NFIB business optimism index, weekly chain store sales and the IBD/TIPP economic optimism index.

Originally published by Divik Nigam – (Author), CommSec