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The Wrap: ASX stumbles on US inflation concerns, tech takes a hit

Welcome to your five-minute recap of the trading day, and how the experts saw it.

The numbers: The ASX 200 dropped 0.8 per cent to 7175.9 points on Thursday, as US inflation worries sent share markets lower all over the Asian region. The energy and utilities sectors were the only ones to finish higher despite a fall in oil prices with the energy sector up more than 3 per cent.

The tech and health care sector weighed down the market, with tech down 2.5 per cent. Afterpay owner Block Inc was the main drag, dropping 5 per cent.

The lifters: Woodside Energy 5.2%, Tabcorp 5%, IGO 3.9%

The laggards: Megaport -6%, Polynovo -5.9%, Telix -5.8%

The lowdown: The ASX 200 followed Wall Street lower after the US investors reacted to data showing manufacturing activity was stronger than expected - meaning more aggressive action by the US Fed may be needed to tame inflation.

The report showed US manufacturing growth accelerated last month, contrary to economists’ expectations for a slowdown.

“Against a broader narrative of slowing economic activity, we have not yet seen a material slowdown in US manufacturing activity in the data,” Nomura said in a report on Thursday.

And in what may be a sign of the times, Wesfarmers CEO Rob Scott chose to highlight the conglomerates industrial businesses at its investor day rather than its high-profile retailer businesses like Bunnings, KMart and Officeworks.

The price of oil tumbled below $US113 a barrel following a report that Saudi Arabia is ready to pump more should Russian output decline substantially as sanctions over its invasion of Ukraine rise. It didn’t trouble the local energy sector which led the gains on Thursday, and the only other sector in the black was the closely related utilities sector, which was aided by a rebound from Origin Energy.

Matt Simpson, Market Analyst at City Index said the Saudi news is unlikely to lead to any changes at the OPEC meeting being held later on Thursday, but it was enough to persuade the market.

“The fact the idea has been floated has seen bearish momentum accelerate on oil prices as traders fear fresh supply could be coming,” he said.

Meanwhile, COVID cases fell in China and Beijing ordered state-owned policy banks to set up a $US120 billion line of credit for infrastructure projects to help boost the economy out of its lockdown funk, but the Chinese sharemarket remained subdued.

Quote of the day: “This flight would bring 4.6 million bottles of infant formula and pave the way for up to 27.5 million total bottles of Bubs infant formula to be supplied to American families in the weeks ahead ... I thank the folks from Down Under.” US President Joe Biden on the milk formula flights from Australia’s Bubs that will help ease a US shortage.

Post of the day:

You may have missed: It’s not often that the CEO of a company with a market capped that barely topped $200 million as of last month, gets a meeting with the US President. The fairy tale continues over the next week with Bubs Australia shipping its infant formula on US Defence Department-contracted commercial aircraft from its hub in Melbourne, to Pennsylvania and California on June 9 and June 11, respectively.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.