The local share market has suffered its second drop of more than 100 points in the past three days, with more brutal losses for big banks and mortgage lenders following Tuesday's rate hike.
The benchmark S&P/ASX200 index closed Thursday on the lows of the day, finishing down 101.4 points, or 1.4 per cent, to a nearly four-week low of 7019.7. The broader All Ordinaries dropped 106.6 points, or 1.45 per cent, to 7240.4.
Losses for the big four banks accounted for 38 points of the ASX200's slide, dragging the financial sector down 2.2 per cent, with the Reserve Bank of Australia's larger-than-expected rate hike on Tuesday threatening their profit margins.
Commonwealth Bank fell 2.6 per cent to a three-month low of $94.95, Westpac was down 3.7 per cent to a three-month low of $21.17, NAB had fallen 2.3 per cent to a three-month low of $28.25, and ANZ dropped 2.3 per cent to a one-and-a-half-year low of $23.35.
Non-bank mortgage lenders were also down sharply, with Genworth Mortgage falling 8.3 per cent, Pepper Money dropping 6.5 per cent and MyState Limited down 4.2 per cent.
City Index analyst Tony Sycamore said there'd been "carnage" among the big banks, with the financial sector currently down 7.6 per cent this week. That puts it on track for its worst week since the onset of the pandemic in March 2020.
He said while higher interest rates were good for banks in moderation, there was concern about bad debts and a tanking property market diminishing mortgage books that comprise the bulk of their assets.
"If interest rates go too high, and people start losing their jobs, that becomes a credit impairment issue," he told AAP.
"What are the bad debts going to look like? And what do the assets sitting on their books look like? If property goes down 20 per cent, that's a material hit to the banking sector's asset base."
The heavyweight mining sector was the worst performer, falling 2.2 per cent as BHP dropped 2.4 per cent to $46.24 and Rio TInto fell 1.2 per cent to $117.47.
Syrah Resources fell 10.1 per cent to a three-month low of $1.38. The plunge came after an insurgent attack at a mining site in the same province as its Balama graphite operation in northern Mozambique, raising security concerns there.
The energy sector was the only one of the ASX's official 11 sectors in the green, climbing 0.6 per cent on rising oil prises. Brent crude prices spiked 2.3 per cent to US$123 a barrel, close to a three-month high, on increased demand as China ends its lockdowns.
Woodside Energy gained 1.9 per cent to a more than two-year high of $35.39 and Beach was up 0.8 per cent to an 18 month high of $1.885, although Santos was down 1.1 per cent.
Crown added 2.0 per cent to $13 after gaming regulators in NSW and Victoria approved Crown's takeover by US private equity group Blackstone. Regulators in WA and the Federal Court still must approve the scheme.
Magellan rebounded a bit from Monday's sharp sell-off, gaining 2.2 per cent to $12.82, announcing that co-founder Hamish Douglass would resume working with the wealth manager in a consulting role.
John Lyng Group fell 5.5 per cent to $5.36 despite raising its full-year revenue guidance by eight per cent, to $867 million, amid strong demand for its building restoration services following the Queensland and NSW floods.
The Australian dollar was buying 71.79 US cents, from 72.07 US cents at Wednesday's close.
ON THE ASX:
The benchmark S&P/ASX200 index finished Thursday down 101.4 points, or 1.42 per cent, to 76,019.7
The All Ordinaries index closed up 106.6 points, or 1.45 per cent, to 7,240.4.
One Australian dollar buys:
71.79 US cents, from 72.07 US cents when the ASX closed on Wednesday
95.84 Japanese yen, from 96.16 yen
66.99 Euro cents, from 67.43 cents
57.32 British pence, from 57.35 pence
111.27 NZ cents, from 111.57 cents