The ASX was down 0.90% from the open, taking its lead from big losses in the US overnight. It has come up a little since, and is trading down around 0.86%.
The theory going around is that investors are offloading higher-priced tech stocks, and the worry is it’s part of a broader sell-off.
US markets took a beating overnight, with selling particularly heavy on the NASDAQ, which was down 3.1%. The Nikkei was also down 1.8% this morning.
Meanwhile, Coca Cola Amatil has picked one of the worst days in recent memory to issue negative guidance. It’s down more than 13%.
CMC Markets chief markets strategist Ric Spooner explains:
The Nasdaq Index has returned to last week’s closing levels after falling more than 3% last night. Other sectors were not immune, however, with some of the discretionary sectors such as finance, consumer services and industrials also under pressure on US markets.
Australian markets have followed suit. Despite the fact that the technology industry is a relatively small sector in the local market it’s under pressure. Freelancer is down 7.5% and Xero 7%. Last night’s US action has also set a negative tone for the broader market with 167 stock in the ASx 200 index down in early trading.
Coca Cola Amatil has picked a bad day to be releasing negative guidance with the stock under heavy pressure.
China is a key issue for markets at the moment. Their inflation figures are due out today. While no surprises are expected a weaker than anticipated number might kindle further hopes of more government stimulus and support markets.
Generally though, the size of last night’s US sell off will leave investors nervous at this stage and is likely to prevent any major recovery on the day.