Australian shares have closed lower on Tuesday, with investors tracking cues from a weak overnight session on Wall Street, while a drop in commodity prices has also pulled down the resource-heavy bourse.
The ASX 200 fell 0.4 per cent, or 31 points, to 7,454. The broader All Ordinaries dropped 38 points, or 0.5 per cent, to 7,735.
The Australian dollar was up 0.1 per cent, at 74.28 US cents.
All 11 sectors on the ASX closed lower. Health care was the worst-performing sector, down 1.5 per cent.
Energy stocks fell 0.5 per cent, tracking an overnight drop in oil prices, as traders fretted that the COVID-19 surge would cut demand in China and as International Energy Agency countries planned to release record volumes of oil from strategic stocks.
Sector heavyweights Woodside Petroleum and Santos finished flat.
Raw material prices dropped as China's stringent curbs dented market sentiment and fuelled worries the recovery momentum in the world's second-largest economy might lose steam.
After falling during the day miners finished almost flat.
Financials lost 0.3 per cent, weighed down by poor performances in the Big Four banks.
NAB was flat, ANZ lost 1 per cent, CBA slipped 0.1 per cent and Westpac fell 0.4 per cent.
Pendal closed 0.2 per cent down, at $5.29, after it rejected Perpetual’s $2.4 billion takeover offer, saying the offer was not in the best interests of its shareholders.
The $6.23 per share offer for Pendal, a former unit of Westpac Banking Corp, was first disclosed on April 4 and was at a 39.2 per cent premium to the stock's close on April 1.
Shares of Perpetual lost 0.4 per cent, to $32.15.
Regis Resources gained 4.2 per cent, Bluescope Steel added 2.8 per cent, Elders Limited added 2.7 per cent, Uniti Group Limited gained 2.6 per cent and St Barbara Limited closed 2.4 per cent higher.
Imugene Limited copped the biggest losses, down 8.7 per cent, followed by Zip Co, which lost 6 per cent. Rounding out the worst-performing five stocks were Pilbara Minerals, which fell 5.8 per cent, while Liontown Resources dropped 5.3 per cent and Paladin Energy closed 5.1 per cent lower.
Business conditions and confidence rebound
Meanwhile, business conditions have surged higher in March and confidence has also strengthened, according to NAB's monthly business survey.
The report said confidence jumped in the transport, construction, and recreation and personal services sectors, and leading indicators also strengthened overall with capacity utilisation up to 83.1 per cent.
Across the states, WA saw a significant boost to conditions as the border fully reopened. Conditions and confidence are now fairly strong across all jurisdictions.
Overall, both conditions and confidence are now back around the levels last seen in the pre-Delta rebound, despite activity having more than recovered its pre-COVID level.
"Businesses reported very strong trading conditions and a sharp rise in profitability, which indicates demand is continuing to hold up as the economy rebounds from Omicron and growth gathers momentum," NAB Group chief economist Alan Oster said.
"These cost pressures are very broad-based across industries.
"Overall, the results depict a very strong rebound, led by strong consumer demand."
Rate-sensitive growth stocks lead decline
Wall Street closed sharply lower on Monday as investors started the holiday-shortened week in a risk-off mood, with rising bond yields weighing on market-leading growth stocks ahead of crucial inflation data.
All three major US stock indexes ended deep in negative territory, with tech and tech-adjacent stocks pulling the Nasdaq down 2.2 per cent.
"There's been two kinds of sell-offs in the past month or two," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
"There's the rising yields, which primarily affects tech and other growth stocks, and then there's the recession/economic slowdown sell-off that affects energy and various materials' names.
"Today, you're seeing both."
The Dow Jones Industrial Average fell 413.04 points, or 1.19 per cent, to 34,308.08, the S&P 500 lost 75.75 points, or 1.69 per cent, to 4,412.53, and the Nasdaq Composite dropped 299.04 points, or 2.18 per cent, to 13,411.96.
US yields hit three-year highs
The benchmark 10-year US Treasury yield hovered near a three-year high ahead of key inflation data expected on Tuesday.
The US Federal Reserve has vowed to aggressively tackle scorching inflation, and market participants largely expect a series of 50-basis-point interest rate hikes from the central bank in the coming months.
The Labor Department's CPI report is expected on Tuesday for any sign the inflation wave has crested.
Analysts expect the report will show an 8.5 per cent year-on-year growth in consumer prices, the hottest reading since 1981.
Impact from Ukraine and China
Ongoing geopolitical strife also helped prompt the flight to safety.
Ukraine said it expected Russia to launch a huge new offensive soon as the most serious conflict in Europe since the Balkan wars of the 1990s wore on, despite ongoing peace negotiations.
All 11 major sectors in the S&P 500 ended the session in the red, with energy shares suffering the biggest percentage losses.
MSCI's gauge of stocks across the globe closed down 1.33 per cent and the pan-European STOXX 600 index slid 0.59 per cent as regional bourses fell with the exception of France's CAC 40.
Oil prices dropped by about $US4 a barrel, with Brent tumbling below $US100 on plans to release record volumes of crude from strategic reserves and on continuing COVID-19 lockdowns in China.
Brent crude oil was trading at $US98.97 a barrel by 7am AEST.