Yesterday’s 91 point fall on the ASX 200 surprised some with its intensity – well they will get a second chance to assess the health of the local market today after Wall Street suffered its biggest fall of the year so far overnight Thursday.
Our market will start with a fall of more than 1.2% or over 70 points this morning.
Widespread falls in the shares of consumer discretionary companies, (especially media), tech giants (especially the Big Five, Amazon, Facebook, Apple, Twitter and Netflix) and energy stocks dragged the Dow down a massive 358 points or 2.1%. The S&P 500 shed 2.1% as well, while the Nasdaq Composite shed 2.8% and led the way lower.
The Dow and the Nasdaq both had their biggest falls in 18 months, while the S&P 500 is now negative for the year and 1.1% under its closing level for 2014.
Hammering US and European stocks were fears about the health of emerging markets and economies, led by China, Brazil, Russia, Malaysia, Indonesia and Turkey. Economists say investors have withdrawn around $US1 trillion in investments and loans to emerging economies so far this year ahead of the expected US rate rise next month.
Falling commodity prices – led by copper, oil (up slightly overnight though) other metals and major agricultural products – are telling us the slowdown, especially in China, is continuing to deepen.
Overproduction and surpluses are not helping support prices or demand, and are depressing the prices of major miners such as BHP Billiton and Rio Tinto, not to mention oil and gas giants.
Some analysts say that with those big five tech stocks leading the way, Wall Street shares are heading for a shakeout ahead of the still expected Fed rate rise on September 17.
Wall Street’s massive sell off – which followed 2% plus falls across Europe and 3% plus falls in Chinese markets in Shanghai and Shenzhen – saw the overnight ASX 200 futures market crunched, with a fall of more than 70 points on the card at the opening.
The Aussie dollar eased, but not by as much as the size of the falls on Wall Street might indicate – the currency fell well under 73 US cents overnight, then rebounded to around 73.35 at 7 am.
The ASX 200 index closed down 92 points, or 1.7% here yesterday at 5288.6, while the All Ordinaries index dropped 84 points, or by 1.6%, to 5295.5.
More volatility in Chinese sharemarkets contributed to the nervous mood among investors, with the benchmark Shanghai index falling more than 3% (as did Shenzhen) as Chinese authorities try to get local investors to start supporting stocks instead of depending on continuing official support.
Lower oil prices helped crunch local energy shares, such as Santos and Woodside, while a weak profit report from Origin saw its shares down 13%.
BHP shares fell 3.1%, to $24.38 to trade at levels not seen since late 2008. Rio Tinto fell 2.4% to $49.41, while Telstra lost 1.4% to $6.12.
Among the banks, ANZ shed 2.4% to $29.13, Commonwealth Bank lost 2.7% to $76.15, National Australia Bank shed 1.7% to $32.04, and Westpac fell 1.6% to $32.20.
Later today the flash report on the health of Chinese manufacturing will be issued – another weak reading will add to the pressures on local shares.
