The Australian Stock Market Was Hammered By Program Sellers Today

Getty: Mark Metcalfe

It wasn’t a great day for the ASX 200 today with the index finishing off its lows but still down around 50 points over the course of the day at 5486.6, down 0.89% for the session.

There were a number of catalysts for the across-the-board selling according to Assad Tannous, senior trader at Asenna Wealth Solutions.

Initially selling pressure began after Chinese authorities announced a crackdown on inventory lending by steel mills in China which put the the iron ore price under pressure. It hit a seven-week low which then put Australian miners BHP, Rio Tinto, Fortescue, Atlas Iron and Arrium all on the back foot.

But Tannous told Business Insider that it was the program selling that had really caught his eye.

He said that looking at the market depth in the top 50 stocks on the ASX it looked like there was a little bit of portfolio dumping going on.

The sells are occurring across all major heavyweight stocks and are happening at certain time intervals. When I see this it usually indicates a short term top in our market. If 5450 doesn’t hold on the XJO (ASX 200) then we could be looking for some long term trend line support around 5250.

He said that with the banks having had a solid run and uncertainty around the budget’s approach to tax impacting on retailers that the rotation we have seen in US stocks is starting to occur here in Australia. Tannous noted the Nasdaq had been “giving us some signals that there is a rotation going on from growth stocks to defensive. It’s definitely time to be cautious in the short term – the ‘sell in May and go away’ theme might just play out again.”


Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.