SYDNEY, AAP – The Australian share market is down sharply midway through the session after following a negative lead from Wall Street amid signs the cost of capital will rise sharply.

The benchmark S&P/ASX200 index was saturated with red at noon on Friday, falling 129.6 points, or 1.71 per cent, to 7463.2. Miners drove the exchange lower, although all sectors were down with the exception of resilient healthcare stocks.

The poor sentiment is largely tied to signs in the US that the central bank will aggressively raise interest rates, which includes a possible 0.5 percentage point rate hike in May.

There are also growing concerns of a sharp economic downturn in the US and elsewhere, weighing on most listed companies. Even those companies tied to commodities, where prices remain healthy, were sold down.

Higher cash rates – and bond yields – tend to depress share prices over time, as the cost of capital increases and investors switch out of more volatile stocks into the relative safety of government securities. .

 

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Australia’s big iron ore miners were down sharply, led by a 4.6 per cent fall by BHP shares to $48.36.

Oz Minerals disclosed on Friday that copper production had fallen in the March quarter due to bouts of bad weather and the pandemic, prompting a 6.4 per cent fall in its shares midway through the session.

Shares in mining services company Mineral Resources fell 1.8 per cent, despite the company affirming it was on track to meet earnings guidance.

The US earnings season was marked this week by the dramatic sell down of shares in Netflix, after the streaming service reported an unexpected decline in first-quarter net subscribers. Its shares lost a further 3.5 per cent in the North American session even after Wednesday’s 35 per cent fall.

The Australian dollar was buying 73.57 US cents at 1200 AEST, compared with 74.33 US cents at noon on Thursday.