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Tech, energy hit as ASX loses 1.06pc

Steven DeareAAP
Shares were lower on the ASX and there were sizeable losses for technology and energy.
Camera IconShares were lower on the ASX and there were sizeable losses for technology and energy. Credit: AAP

Technology stocks have been routed on a downbeat Australian share market and a fund manager tips the tech slide will continue.

Information technology shares lost 4.18 per cent after US markets closed lower due to inflation fears.

Buy now, pay later stocks were chief victims on the local market.

Zip lost 9.14 per cent to $6.76. Afterpay shed 8.72 per cent to $89.00. Sezzle fell 5.58 per cent to $7.95.

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The benchmark S&P/ASX200 index closed lower by 75.8 points, or 1.06 per cent, to 7097 on Tuesday.

The All Ordinaries closed down 88.2 points, or 1.19 per cent, to 7331.6 points.

Tribeca Investment Partners portfolio manager Jun Bei Liu said the key theme for the next 12 months was reflation.

Investors expect government efforts to stimulate economies from coronavirus recessions will eventually lead to inflation.

Higher prices and rates do not bode well for technology providers, which often rely on cheap borrowing.

Ms Liu did not see investors rushing back to technology shares soon.

"Technology providers will have a tougher time compared to the good times they enjoyed last year," she said.

Inflation concerns will be top of mind for investors when the US gives its consumer price index report this week.

On the ASX, technology shares were far from the only ones declining.

Most shares declined and only those in consumer staples moved higher (0.27 per cent).

Energy shares were hard hit and shed 2.71 per cent.

Beach Energy was a major loser and lost 4.12 per cent to $1.28.

The category's losses follow a cyber attack earlier this week which forced a major US fuel pipeline to shutdown.

Colonial Pipeline, the largest pipeline in the US, said it should restore service by the end of the week.

Shares in materials, financials and telecommunications also lost more than one per cent.

Boral had a better day after Seven Group's $8 billion takeover offer late on Monday.

Boral encouraged shareholders to reject the offer, saying the bid undervalues its target.

The off-market bid of $6.50 per share did not offer a premium on the closing price of shares on Monday ($6.50).

Shares in Boral were up 3.38 per cent to $6.72.

Shares in Seven were down 2.79 per cent to $20.56.

Big miners were sold after their whopping gains on Monday helped the market to a record close.

Fortescue Metals lost 2.82 per cent to $24.09 on Tuesday and Rio Tinto shed 1.75 per cent to $130.61 even as the iron ore price continued to climb.

BHP dropped 0.72 per cent to $51.28.

The Federal Court approved NAB's plan to buy digital bank 86400.

NAB in January said it would pay about $220 million.

The bank will combine 86400 with its existing online-only service, UBank.

Shares were down 1.03 per cent to $26.81.

Westpac had the steepest fall of the big four and lost 1.29 per cent to $26.08.

A2 Milk fell 6.39 per cent to $5.71 a day after lowering its full-year sales forecast.

Domestically, investors will be keeping an eye on the federal budget to be released on Tuesday night.

A turnaround in the deficit will be unveiled.

Economists are expecting a figure around $155 billion, which would be a vast improvement on the $198 billion shortfall estimated in December's mid-year budget review.

On Wednesday, building products provider CSR will give full-year earnings.

The Australian dollar was buying 78.26 US cents at 1717 AEST, lower from 78.61 US cents at Monday's close.

ON THE ASX

* The benchmark S&P/ASX200 index closed lower by 75.8 points, or 1.06 per cent, to 7097 on Tuesday.

* The All Ordinaries closed down 88.2 points, or 1.19 per cent, to 7331.6 points.

* At 1717 AEST, the SPI200 futures index was down by 18 points, or 0.25 per cent, to 7047.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 78.26 US cents, from 78.61 cents on Monday

* 85.22 Japanese yen, from 85.53 yen

* 64.52 Euro cents, from 64.60 cents

* 55.43 British pence, from 55.82 pence

* 107.83 NZ cents, from 107.86 cents.

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