ASX200 falls below 6,000 as global uncertainty extends into Asian trade

Stocks are struggling to stay afloat. (Photo by Emin Menguarslan/Anadolu Agency/Getty Images)

Australian stocks have slumped at the open as the fallout from Italy’s political turmoil weighs on Asian markets.

This morning’s losses saw the local index fall back below 6,000 for the first time since the start of the month.

The ASX200 has now lost about 2.7% since testing decade-highs in the middle of May.

The local index fell by as much as 0.8% before bouncing off its intra-day low. As at 1pm AEST, it had lost around 0.6%:

Ilya Spivak, senior strategist at DailyFX, said there’s unlikely to be any catalysts today which will reverse the risk-off sentiment seen in overnight markets.

“The ASX managed to shrug it off yesterday, but that seems unlikely today,” Spivak said.

“A barebones economic calendar means there will be relatively little in the way of sentiment-driven trade, although the New Zealand dollar may find something of an independent lead as RBNZ Governor Orr testifies in Parliament.”

“On balance, the risk off mood bodes well for the Japanese yen, US treasuries and the US Dollar. Stocks, higher-yielding currencies (like the Aussie) and naturally the euro are likely to continue to suffer,” Spivak said.

AxiTrader’s Greg McKenna said from a technical standpoint, if the ASX200 closes below 5,976 then 5,937 will become the next key line of support.

“Where’s its headed depends structurally on what happens offshore. But there are benefits that accrue to many companies from a lower Aussie dollar,” McKenna said.

In line with the risk-off sentiment in global markets, the AUD has fallen back below US75 cents this morning after a sharp decline overnight.

As was the case in global markets, bank stocks are leading the falls.

The ASX200 financial index is down more than 1% in early trade, with all of the big four banks in the red while Macquarie has lost more than 3%.

McKenna noted that some of the major banks — which comprise around 25% of the local index — are now trading near their lowest level in five years.

“The outlook could turn negative very quickly in the current economic environment. That’s particularly the case given the ongoing banking Royal Commission,” McKenna said.

Big miners are also lower, with BHP and Rio both having shed around 1%.

As at 11am AEST this morning, all the major sectors on the ASX were lower. Consumer discretionary stocks are the best performers so far, a short time ago down 0.44%.

Embattled franchise company Retail Food Group is up more than 4% after announcing a new CEO.

Elsewhere in Asian markets, stocks in Japan and South Korea are both down more than 1% in morning trade.

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