The ASX 200 is off 0.57% at 5,599.30 having tried to claw its way back above the important 5,600 psychologically level in late trade.
It’s the third consecutive day of falls and in closing the week near its lowest levels for 3 weeks the index risks further losses ahead.
We asked Michael McCarthy from CMC Markets what was driving the weakness and he said that volumes were light and the sectoral movements within the index suggested that “institutional investors remain sidelined ahead of tonight’s non-farm payrolls” in the US.
McCarthy said that there had been “a combination of weaker commodity prices and stocks going ex-dividend” which had pushed the market through technical support and these sellers then moved through the market selling across the ASX 200.
Importantly, perhaps because of the non-farm payrolls or maybe even because the S&P 500 in the US has stalled around 2000 this week, there are “few signs this afternoon of the under bidders that have characterised the market this year”.
McCarthy said this meant that if the market closed near its lows then that introduced some uncertainty into next week and a possible downside acceleration depending on tonight’s jobs numbers in the US.
McCarthy says “the key question for Australian stocks is whether recent falls in iron ore, copper and oil are the product of declining global industrial sentiment or merely a reflection of a stronger US dollar”.
That is the $64 question.