RENMINBI RATTLES, SHANGHAI SHAKES: Australian stocks end deep in the red

Hulton Archive

For the fifth session on the trot Australia’s stock market has fallen, dragged deep into the red by yet another rout in Chinese markets.

Here’s the final, and ugly, scoreboard.

  • ASX 200 5010.3000 , -112.83 , -2.20%
  • All Ords 5068.8 , -109.21 , -2.11%
  • AUD/USD 0.7042 , -0.0029 , -0.41%

The benchmark ASX 200 index closed down 2.20%, suffering its largest percentage decline since September 29 last year. At one point the index briefly fell below the 5,000 point level before staggering higher into the close.

ASX 200 5-minute chart Source:

After opening lower, losses accelerated just after 12pm AEDT – an almost identical outcome to what was seen on Wednesday.

The first blow was delivered by yet another weakening in Chinese currency, the renminbi. The PBOC set Thursday’s USD/CNY fix at 6.5646, higher than the 6.5555 level it closed at yesterday and Wednesday’s fixing level of 6.5314.

The second, more dramatic hit, came in the form of a nerve-jangling 14-minute rout in Chinese stocks. At 12.30pm AEDT it began trade. Just 13 minutes later it was halted, triggering internal circuit breakers that kick in once the market falls by 5%. After pausing for 15 minutes, the market reopened only to tank again, losing a further 2% in less than one minute.

At 7%, the market was forced to shut as additional circuit breakers kicked in. It was frenetic, and to those unaccustomed to the trials and tribulations of Chinese markets, undoubtedly scary.

Even for experienced market watchers, what occurred today rarely occurs.

In shock, investors sold risk assets across the board, including the ASX 200. As the scorecard for individual sectors on the index shows below, it was rout. Only the All Ords gold index finished higher, bid up as investors searched for anything with a the smallest semblance of safety.

  • All Ords Gold Index 2.28%
  • A-REIT’s -0.72%
  • Consumer Discretionary -1.54%
  • Consumer Staples -2.13%
  • Energy -5.29%
  • Financials -2.28%
  • Healthcare -1.26%
  • Industrials -1.44%
  • Information Technology -0.50%
  • Materials -2.93%
  • Telecommunications -1.49%

You can bet that there’ll be more than a few nervous investors come 12pm AEDT tomorrow.

Here’s the top stories for Thursday.

1. As it is dominating discussion not only in markets but elsewhere, here’s the tale of the tape for China’s stock market on Thursday, the shortest session on record.

2. Chinese authorities, like clockwork, announced measures to help alleviate the selling pressure. Here’s why it’s only likely to delay the inevitable.

3. JPMorgan Asset Management’s David Kelly and team have surveyed the economic landscape and released their first-quarter presentation outlining the state of the markets and more. Here’s their view on what’s currently happening in global markets.

4. Australian building approvals just fell four times more than expected in November, suggesting that cyclical peak may have already passed.

5. Led by Sydney and Melbourne, Australia’s capital city auction clearance rates tumbled to a 3-year low last quarter.

6. Major layoffs will be coming to Yahoo as part of its planned reorganisation to get its business back on track.

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