May’s modest 0.92% rise in the ASX (the only major market measure to rise in the month globally) was snuffed out yesterday in a sell-off that gathered pace as the day went on.
The market freeze was appropriate for the first day a new month and winter.
The S&P/ASX 200 index slumped 1.2%, or 76 points, to 6320.50 by the close.
The steep losses came one day ahead of a Reserve Bank meeting where the central bank will cut the cash rate by 0.25% to a record low of 1.25%.
The Australian dollar traded at US69.45 late yesterday, helped by the emerging belief in the US that the Fed is about to change tack on monetary policy and look to cut the Fed Funds Rate.
The fall was three times the slide in the overnight futures market on Saturday of 24 points – suggesting that the gloom about the US and Donald Trump’s trade war is far more deep-seated than it was towards the end of last week.
His extension of his trade war to Mexico and India is shaking confidence in the reliability of the US as a trading partner and upholder of rules-based global trading and financial systems.
Miners and banks led the market down, with BHP falling 2.5% to $36.81 and Rio Tinto down 3.2% to $97.11 as global iron ore prices fell 7% late last week.
Westpac shares lost 1.3% to $27.08 and Commonwealth Bank fell 0.8% to $77.91. ANZ shares fell 1.2% to $27.54. Westpac shares also fell 1.2% to $27.02.
However, with gold prices edging higher Newcrest shares jumped 3.7% to $28.21 and shares in Evolution Mining were up 3.6% to $4.01.
