As it happened: ASX drops 1.6 per cent as miners slide

The local sharemarket erased its gains from earlier in the week to end 1.6 per cent lower on Friday as mining stocks fell heavily.

The ASX200 followed its Wall Street peers lower from the open and extended its losses throughout the day. The index closed at 7,473.3, a loss of 1.6 per cent for the day and 0.08 per cent for the week.

US stocks saw late-session falls on Thursday after US Federal Reserve chair Jerome Powell flagged the central bank would consider sharp interest rate rises in the coming months, with a jump of 50 basis points “on the table” at its May meeting.

Australian analysts have been pricing in rate rises in the coming months though say there is no reason to expect a “panic hike” in May. Local quarterly consumer price index figures are set to be released next Thursday.

“We expect Australia’s Q1 CPI will be strong enough to justify the hawkish policy u-turn delivered by the RBA at its April meeting, but ‘soft’ enough to prevent a ‘panic’ rate hike in May.” Deutsche Bank analysts wrote in a note.

Australia’s materials and energy sectors both saw heavy falls on Friday, led by BHP which declined 4.4 per cent to $48.49. Santos lost 2.6 per cent to $8.15 while Rio Tinto posted a decline of 2.4 per cent to $113.60 after revealing softer than expected production numbers earlier in the week.

The big banks also reversed gains made on Thursday, with CBA, Westpac, NAB and ANZ all down by more than 0.5 per cent throughout the session. Commonwealth Bank shares lost 0.3 per cent for the week overall to land at $105.37.

Technology stocks were also caught up in speculation of higher interest rates, with the sector 2.6 per cent lower on Friday. Buy now, pay later operator Zip Co slid 4.4 per cent to $1.10 as the market digested its quarterly update from Thursday.

Health stocks continued to be the biggest lifters of the week, with CSL jumping 1.5 per cent to $270.86. Ramsay Health Care continued to be buoyed by the prospects of a $20 billion takeover by KKR, and was 1.7 per cent stronger to $84.37.

The ASX200 chased its all-time high of 7,632.8 on Thursday, but finished the week 159.5 points off that record.