Australian stocks were given every reason to rally on Tuesday, and didn’t. They closed lower, casting doubt as to whether the plunge in US stocks on Friday, and subsequent recovery on Monday, was truly driven by near-term expectations for the US Fed.
First, the scoreboard. If you were banking on a stellar rally arriving today, it’s best to look away now.
- ASX 200 5207.80 , -11.81 , -0.23%
- All Ords 5310.00 , -9.10 , -0.17%
- AUD/USD 0.7527 , -0.0036 , -0.48%
Price action doesn’t get much more bearish than that.
After spiking over 1% upon the resumption of trade, the gains were slowly whittled away over the course of the session, eventually culminating with the benchmark ASX 200 index closing on its lows.
It has now fallen for four consecutive sessions, losing 4% in the process. From the high struck on August 28, the ASX 200 has now lost over 6.5%.
The slump followed a 1.5% surge in US stocks overnight, along with strong economic data released from China during the session.
Nothing was going to rescue the market today. It was a case of good news being bad news for stocks, seemingly limiting the possibility of additional monetary stimulus being delivered by major central banks.
Certainly Australian bond yields were rock solid with the Australian 10-year yield rising back above the 2.10% level after an exploratory dip below earlier in the session.
It currently sits at 2.116%.
Despite the recovery in yields, financials were among the worst performers, largely explaining the weakness in the broader index due to its sheer market weighting.
All of the major banks finished lower by more than 1%. The Commonwealth Bank, on the 25th anniversary of its market listing, closed at more than three-year low of $69.50.
The energy sector was also lower, tracking weakness in crude oil futures. Investors appear to be taking the view that last weeks draw in US inventories — largely due to weather disruptions — will be reversed in upcoming data.
Here’s the sector scorecard.
- A-REITS -0.17%
- CONSUMER DISCRETIONARY 0.70%
- CONSUMER STAPLES -0.07%
- ENERGY -0.69%
- FINANCIALS -0.69%
- HEALTHCARE 0.52%
- INDUSTRIALS 0.56%
- INFORMATION TECHNOLOGY 0.48%
- MATERIALS 0.41%
- TELECOMMUNICATIONS -0.89%
- UTILITIES -0.62%
- ALL ORDS GOLD INDEX 1.60%
The moves in Australia were reflective of the broader tone in Asia with stocks failing to capture the exuberance seen in the US session.
Chinese markets — both mainland and in Hong Kong — are trading mixed while the Nikkei 225 and KOSPI closed with gains of 0.4%.
European stock futures are currently pointing to gains — it will be interesting to see whether that lasts given the tepid moves in Asia.
US S&P 500 futures are currently lower by 0.5%.
Here’s the regional scorecard.
- ASX 200 5207.80 , -11.81 , -0.23%
- Nikkei 225 16729.04 , 56.12 , 0.34%
- Shanghai Composite 3023.79 , 1.81 , 0.06%
- Hang Seng 23365.60 , 75.00 , 0.32%
- KOSPI 1999.36 , 7.88 , 0.40%
- Straits Times 2835.86 , -37.47 , -1.30%
- S&P 500 Futures 2148.00 , -10.50 , -0.49%
- USD/JPY 101.84 , 0.00 , 0.00%
- USD/CNY 6.6878 , 0.0034 , 0.05%
- AUD/USD 0.7529 , -0.0034 , -0.45%
- NZD/USD 0.7319 , -0.0031 , -0.42%
- AUD/JPY 76.68 , -0.34 , -0.44%
- EUR/USD 1.1230 , -0.0002 , -0.02%
- GBP/USD 1.3317 , -0.0016 , -0.12%
- USD INDEX 95.228 , 0.1330 , 0.14%
- Gold $1,329.09 , $1.94 , 0.15%
- Silver $19.15 , $0.09 , 0.48%
- WTI Futures $45.62 , -$0.67 , -1.45%
- Copper Futures ¥36,550 , ¥210 0.58%
- Iron Ore Futures ¥391.50 , -¥13.50 , -3.33%
10-Year Bond Yields
- Australia 2.116%
- New Zealand 2.485%
- Japan -0.022%
- Germany 0.030%
- UK 0.864%
- US 1.663%
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