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Global growth worries drag shares lower

·3-min read

The Australian share market continued its downward momentum amid a broader decline in the Asia Pacific, as investors remain wary of quicker-than-expected rate increases by central banks around the world.

The benchmark S&P/ASX200 index closed down 41.4 points, or 0.64 per cent lower, at 6,433.4 on Monday following a 6.6 per cent slide last week.

The broader All Ordinaries dropped 53.8 points or 0.81 per cent to 6,609.5.

Heavy losses in mining and energy stocks accounted for most of the damage.

"What is feeding this story is worries about global growth and we're already seeing it with the OECD and the World Bank revising down global GDP numbers," said Chris Conway, lead fund manager at Marcus Today.

"If the economy slows, which in fact the central banks want because inflation is so high, that will crimp demand for energy and commodities and the market is reacting to that."

The weak sentiment follows a slump on Friday, resulting in the biggest weekly fall in global markets since the pandemic crisis of March 2020.

Investors are nervous ahead of key events later this week which include testimony from the US Federal Reserve Chair Jerome Powell and inflation data in the UK that is expected to show another high reading.

Energy stocks turned out to be the worst performers in the local market.

Oil prices continued to edge lower on Monday, despite the benchmark crude tumbling more than 7.0 per cent last week over concerns about slowing global economic growth and fuel demand.

Sector heavyweights Woodside Energy and Santos sank 4.9 per cent and 6.0 per cent respectively. Smaller rival Beach Energy lost 8.3 per cent at $1.55.

The mining sector suffered a fresh jolt after iron ore prices tumbled below $US130 a tonne on Friday with Chinese steel mills reducing output amid deteriorating demand prospects.

Mining giants BHP and Rio Tinto were both down more than 5.0 per cent each, while Fortescue Metals Group shed 8.6 per cent to $17.00.

Even safe haven gold stocks could not escape the hammering, with Newcrest, Evolution Mining and North Star all down between 4.0 and 6.0 per cent.

Financial stocks bucked the trend, with investors looking for bargains in the beaten down sector on expectation stocks have been oversold in the past week over concerns about bad debts amid rising rates.

"I think that pendulum swung too far the wrong way so we are seeing the banks finding some support," Mr Conway said.

Each of the big four banks ended in positive territory while insurers such as IAG and Medibank also rose more than 1.0 per cent.

Among individual stocks, tech developer Infomedia jumped 7.4 per cent to $1.60 after receiving a $638.8 million takeover proposal from US-based software company Solera Holdings LLC.

Meanwhile, the Australian dollar was largely steady, buying 69.76 US cents at 1700 AEST, compared to 69.75 US cents at close on Friday.


* The benchmark S&P/ASX200 index closed down 41.4 points, or 0.64 per cent lower, at 6,433.4 on Monday.

* The broader All Ordinaries dropped 53.8 points or 0.81 per cent to 6,609.5.


One Australian dollar buys:

* 69.76 US cents, from 69.75 US cents at Friday's close

* 94.12 Japanese yen, from 93.74 yen

* 66.27 Euro cents, from 66.45 cents

* 57.01 British pence, from 56.91 pence

* 110.03 NZ cents, from 110.48 cents

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