'Nothing made sense': The ASX200 just got crushed for the second day in a row

(Digital First Media / Orange County Register via Getty Images)
  • Australian stocks fell heavily again today, with sharp declines in the energy sector following the overnight selloff in oil markets.
  • At current levels, the local index is sliding back towards its 2018 low reached late last month.
  • Bell Potter analyst Richard Coppleson said there were no obvious catalysts for the falls, in a trading session where “nothing made sense”.

Australian stocks have been beaten up again.

The ASX200 finished 1.74% lower in today’s session, after falling by 1.8% yesterday.

Falls were led by the energy sector, which finished 2.55% lower following the overnight selloff in oil.

Santos slumped by 5%, while Woodside lost 2.55% and Origin lost 1.85%.

Crude oil prices posted their largest percentage drop in three years overnight, and have now fallen by around 25% from recent highs.

At current levels, the ASX is heading back towards its 2018 low of 5,664 points reached late last month, following the October selloff on global stock markets.

ASX monthly chart, Investing.com

From a technical perspective, Pepperstone strategist Chris Weston said the market has a “heavy feel” in this trading range.

The weekly chart shows “clear battle lines — there is huge support into 5,600, while it is hard to have a bullish bias until we see the double top being taken out at 5,930,” Weston said.

Local stocks have under-performed other markets in the region, with Japan’s Nikkei index up slightly while stocks in Hong Kong and China are trading flat.

Bell Potter analyst Richard Coppleson said it was an odd day of trade, where “nothing made sense”.

“Today’s fall was interesting –- no one had any real idea why,” he said, noting there was a lack of large block trades, institutional investors were quiet and US stock futures are pointing higher.

“There was not a lot of institutional support out there and it looks like the ‘instos’ have gone to the sidelines for now.”

“Hence any selling — hot money looking to exit — that hit that market saw it have a much bigger than normal influence, as the buying wasn’t there and they had to sell down to find any volume.”

The big miners and the banks were both deep in the red, as the ASX200 financials index finished 2.04% lower while materials and resources also lost more than 2%.

Westpac led falls among the big banks, finishing 3.05% lower.

BHP and Rio both lost more than 2%, while shares in Fortescue were 4.57% lower as iron ore’s recent rally runs out of steam.

It wasn’t much better for retail stocks, as the ASX200 consumer staples sector (including Wesfarmers and Woolworths) lost 2.19% which consumer discretionary stocks (Harvey Norman, Super Retail Group) lost 0.84%.

The selloff in local stocks was accompanied by the release of two key economic data points, with the quarterly wage price index and Westpac’s monthly gauge of consumer confidence.

The wage data showed annual wage growth climbed to a three-year high, although economists continue to voice their doubts over whether the recent modest wage gains will last.

Westpac consumer data showed Australian households are staying resilient in the face of falling house prices, as optimists outnumbered pessimists for the 12th straight month.

There was also a mixed bag of Chinese data, amid lingering fears about the growth prospects of Australia’s largest trading partner.

Chinese retail sales missed expectations but industrial production activity came in slightly above forecasts.

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