Australian stocks retreat after a wave of risk aversion hits Asian markets

Photo by John Moore/Getty Images

After early strength, Australian stocks are in retreat this afternoon as an overriding bearishness grips Asia’s markets in trade today.

The ASX200 traded up to a high of 5,331.4 in the first 90 minutes for 2016. But since around 11.30am AEDT, prices have slumped almost 60 points with the index currently sitting down 0.39% at 5,274 on the day.

ASX200 5 minute chart

That’s a spectacular performance in the context of moves across the region today. Currently Shanghai stocks are almost 4% lower while stocks in Japan, as measured by the Nikkei, are off 2.59% during the Tokyo lunch.

The key to weakness in Asia stocks, and on forex markets which has seen the Aussie dollar loses around 1% in value, has been the combination of weak Chinese data, the Caixin manufacturing PMI missing expectations with a print of 48.2 in December, and the continued weakness in the Chinese yuan.

After the People’s Bank of China set the official reference rate at 6.5032 this morning, the yuan (USDCNY) has continued to slip to 6.5085 – its weakest level since April 2011.

The major banks, Telstra, Woolworths and Wesfarmers are all lower on the day and after early strength BHP is now lower while Santos and Origin Energy are sharply higher.

It’s the crude oil spike-induced gain of 2.47% in the energy sector which is keeping the ASX in such fine fettle compared to the rest of the region’s acute weakness.

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