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The ASX200 index fell during trading on December 10, 2024. Image: NewsWire/Max Mason-Hubers
A plunge in banking and technology stocks pushed the Australian share market into the red on Tuesday, even as the heavyweight mining sector surged on hopes of a fresh round of Chinese stimulus.
The benchmark ASX200 index fell 30 points, or 0.36 per cent, to 8393 points, while the broader All Ordinaries index fell 37 points, or 0.43 per cent, to 8650 points.
The All Tech Index fell 3.55 per cent to 3,881.5 points, while the Australian dollar fell 0.67 per cent to 63.9 US cents.
Selling was widespread, with eight of the 11 industry sectors closing in the red, with the IT sector falling the most, at 4%, and the financial sector falling 1.74.
News from China exacerbated the rout on both fronts.
China announced an investigation into U.S chip giant Nvidia, sending the world’s most valuable company down 2.55% overnight on Monday and pushing the Nasdaq, the largest U.S tech stock index, down 0.62.
Australia’s tech darlings followed Wall Street’s lead, with Xero falling 4.37 per cent to $170.99 per share, WiseTech Global falling 4.36 per cent to $125.60 and Megaport falling 5.35 per cent to $7.43.
The ASX200 index fell on Tuesday. Image: NewsWire/Damian Shaw
Banks were hit hard as investors took profits and moved into resource stocks in anticipation of a new round of stimulus measures from China.
Chinese policymakers said Monday afternoon they would adopt a “more proactive” fiscal policy and a “moderately loose” monetary policy.
“They’ve gone from cautious to ‘moderately accommodative,'” said Tony Sycamore, market analyst at IG.
“This is significant because this is the term they last used during the 2008-2009 financial crisis.
“The general consensus is that they will actually take action this time.
“So, bank stocks are overvalued, health care stocks are doing very well, and now might be a good time to put some money back into materials stocks because they are trading relatively cheap.
“If China does take the actions it has implied and interprets the statement as we understand it, then this could be a very positive development for resource stocks.
“If we see China actually follow through on that announcement, then there is definitely more upside in resource stocks than in bank stocks.”
Commonwealth Bank fell 1.1 per cent to $157.63, Westpac fell 1.92 per cent to $32.24, ANZ fell 1.83 per cent to $29.48 and NAB fell 2.81 per cent to $37.64.
Big mining stocks surged across the board, with BHP Billiton up 3.05 per cent to $41.83, Rio Tinto up 4.85 per cent to $125.28 and Fortescue up 6.23 per cent to $20.45.
Mineral resources stocks were the best performer on the benchmark index, rising 8.69 percent to $37.16.
Lithium and coal companies also enjoyed solid gains, with Pilbara Minerals up 6.51 per cent to $2.29 and Whitehaven Coal up 3.48 per cent to $6.55.
Mining stocks such as Mineral Resources surged on Tuesday. Image source: Supplied
The market rebounded higher in afternoon trading, paring some losses from an intraday low of 8,360 points as investors digested dovish comments from the Reserve Bank of Australia.
The committee kept interest rates unchanged at 4.35% but said it was “growing more confident” that inflation was “sustainedly moving towards target”.
In corporate news, investment fund Perpetual Group was the worst performer on the benchmark index, falling 8.4 per cent to $20.07, due to a higher-than-expected potential tax charge on its proposed acquisition of Kohlberg Kravis Roberts.
“The previously suggested valuation range of… $106 million to $227 million is now estimated at $493 million to $529 million, and the expected cash proceeds to shareholders from this transaction will be reduced to $5.74 to $6.42 per share from the previously announced range of $8.38 to $9.82 per share,” the company said in a statement.
Insurance giant IAG fell 1.73 per cent to $8.50 after it announced it would defend a class action in the Supreme Court of Victoria.