Continuing the familiar, and only, trend seen so far in 2016, Australian stocks were hammered to start the trading week, extending their losses into a seventh consecutive session.
Here’s the ugly closing scoreboard for Monday.
- ASX 200 4932.2000 , -58.64 , -1.17%
- All Ords 4990.7 , -58.71 , -1.16%
- AUD/USD 0.6973 , 0.0022 , 0.32%
Outlining just how severe the market rout has been to start the new trading year, since the close of December 30 last year, the index has now lost 7.29%.
At seven, the losing streak is also the longest seen since July 2010.
As the daily chart of the ASX 200 reveals below, at one point during the session the index hit the lowest level seen since July 2013.
However, suggesting that bargain hunters may be finding value yet again below the 5,000 point level, the index halved its losses over the second half of the session.
Despite the late rebound, the index, unlike the Australian dollar, was unable to push into positive territory following another unexpected strengthening in the yuan fixing.
The People’s Bank of China set the USD/CNY rate for Monday at 6.5626, below Friday’s fixing of 6.5636 and the final traded price of 6.5938 seen on Friday evening.
A lower figure indicates that the yuan has strengthened against the US dollar. In recent sessions persistent weakness in the yuan contributed to the global rout in risk assets, intensifying fear over an economic slowdown in China and, as a consequence, accelerated capital outflows.
Like last Friday, the surprising strong yuan fix temporarily boosted the Australian market, although another savage sell off in Chinese stocks – down over 2% at the mid-session break – ensured that selling pressure remained intact in the latter parts of the session.
By sector, it was another trainwreck with all bar gold, telecommunications and information technology finishing in the red.
- A-REITS -0.82%
- CONSUMER DISCRETIONARY -0.55%
- CONSUMER STAPLES -0.08%
- ENERGY -1.80%
- FINANCIALS -1.27%
- HEALTHCARE -0.37%
- INDUSTRIALS -0.92%
- INFORMATION TECHNOLOGY 0.72%
- MATERIALS -2.95%
- TELECOMMUNICATIONS 0.14%
- UTILITIES -0.89%
- ALL ORDS GOLD INDEX 0.88%
Losses were led by the materials sector which closed at the lowest level seen since December 2004, extending its losses since late February last year to 36.2%. The two largest firms within the index – BHP Billiton and Rio Tinto – closed with declines of 4.9% and 3.3% respectively.
Financials, the largest component of the broader ASX 200 index by market capitalisation, also slid by a further 1.27%.
The ASX 200 materials chart below is breathtaking for all the wrong reasons.
Here’s the top stories for Monday.
1. It’s been another wild ride for Chinese investors with stocks down over 2% at the mid-session break. Here’s the latest update.
2. To say that what happens in China doesn’t matter to the US is to ignore how the global economy works. Here’s why.
3. Australia’s startup industry’s new year resolution should be to stop asking for taxpayers’ money.
4. These charts reveal just how much more expensive Telstra is than Optus and Vodafone.
5. Is your rental review coming up? Recent trends suggest that you should be asking for a reduction.