Four Charts That Tell The Story Of The ASX's Crashing Prices

Getty/ Paul Kane

The Australian Stock market has been under pressure since making a six-year high earlier this month at 5658. This morning the market had slipped 5% over the past 3 weeks.

While it might be easy to think the sell off is just about the miners, something more fundamental appears to be going on.

There’s the potential that investors, both domestically and overseas, are re-rating the outlook for Australian economic growth.

Here are 4 Charts which show the broad nature of the sell off.

BHP

The Big Australian and bellwether global miner had been outperforming stocks such as Atlas Iron and Fortescue Metals for most of the year but it is playing catch up fast to these smaller miner sell offs.

BHP v The ASX 200 Index – ASX.com

Commonwealth Bank

You’d think that if the miners were being sold that investors might find Australia’s insanely profitable major banks a safe haven. But as you can see after under performing on the upside the Commonwealth Bank is falling as far and fast as the overall index.

That’s the very essence of a terrible hedge.

CBA v The ASX 200 – ASX.com

Woolworths

Wow, even Woolies is under pressure and like the CBA having under performed to the topside seems to be leading the downside. At a time of consumer retrenchment it would seem more likely than not that Woolies should hold up due to the natural lift in sales they should get relative to other sectors. But the tractor beam of lower prices across the index is just too strong.

WOW v The ASX 200 Index – ASX.com

Telstra

If Woolies can’t hold its ground we thought maybe Telstra, which has been generally been doing better than the index lately might look a little better. But, alas not.

TLS v The ASX 200 Index – ASX.com

None of this means stocks will necessarily keep falling but whether it’s these four widely held bellwether stocks or a raft of smaller companies on the ASX or even the Australian dollar it appears that Australia is being re-rated downwards by investors. A report on Bloomberg this morning “Irrational Exuberance Down Under” speaks to this re-rating perfectly.

The good news is that the fall is helping long term valuations and also the economic prospects for Australia as the Aussie dollar heads toward levels which will stimulate growth.

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