Australian stocks were being sold down hard.
Last week’s 1.9% gain disappeared quickly. A short time ago, the ASX 200 was at 5,028.90, down 141.60 points or 2.74%.
Investors were following Wall Street where the S&P 500 closed down 1.6% on Friday over the Fed’s cautious approach to raising interest rates.
On the local market, all ten local sectors were in the red, with energy stocks losing more than 3%. Woodside was down 3.6% to $28.62 and LNG 8% to $1.55. The big miners followed with BHP dropping 3.3% to $23.65 and Rio Tinto 3% to $49.67.
Financial stocks lost almost 3%, with the Commonwealth down 3.5% to $73.16.
Angus Nicholson, market analyst at IG, says the big bank stocks, darlings of self-managed super funds, are at significant risk of a downturn in the Australian economy and particularly the property sector.
“With the outlook for financials, materials and the energy sector all fairly negative over the next few months, we are unlikely to see the ASX returning to its April/May highs just below the 6000 mark, and indeed a significant break below 5000 could well be in the offing,” he says.
“The main bright spot for the ASX at the moment is the prospect of further mergers and acquisitions. But a general sense of pessimism is likely to continue until some decent data on the Chinese economy starts to filter out,” Nicholson says.
Media stocks, which rose last week on the prospect that newly minted prime minister Malcolm Turnbull would ease ownership restrictions, also go sold down. Ten was down more than 5% to $0.185 and Seven West Media almost 7% to $4.68.
Even gold stocks were weaker with Northern Star shedding 2.68% to $2.36.
Among retailers, Woolworths lost 2.5% to $24.20 and Myer almost 1.5% to $0.862.
Premier Investments, Solomon Lew’s fashion retail group, was among a handful of stocks doing well. It gained more than 8% to $12.77 after posting good sales results last week.
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