CANBERRA: Around $25 billion was wiped from the value of the local sharemarket by noon (AEDT), with the benchmark ASX200 following its US peer in tracking toward its worst day since the US election last November. Asian markets also tumbled in the global selloff. The local bourse opened off around 1.1 per cent and kept sliding through the morning. At 12pm (AEDT), the benchmark S & P/ASX 200 index slumped 76.8 points, or 1.33 per cent, to 5,697.8, while the broader All Ordinaries index skidded 74.1 points, or 1.27 per cent, to 5,745.4. It came after the S & P 500 in the US tumbled 1.2 per cent to a four-week low, with local investors having little option but to follow given a pummelling for commodity prices. Asian stocks followed the US and Austyralian lead. Tokyo ended the morning two per cent lower, while Hong Kong shed one per cent and Shanghai gave up 0.2 per cent.
At the heart of the concerns were question marks around US President Donald Trump’s policies, with particular worries around trade and a possible slow process toward any tax reform. “There is an ugly sea of red across global markets this morning as traders finally succumb to their fears that the positive benefits of Trumponomics are going to be delayed,” Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said. “It’s not a surprise really, this is a week when a lack of fundamental catalysts and stalled moves in the US dollar and stocks gave traders time to exercise hope or fear.” It was a sea of red locally for the blue chips, although property stocks were noted outperformers. IG chief market strategist Chris Weston said the market was set up to face a “buyers’ strike”, with a third straight day of falls not surprising given recent investor complacency. “This was a market very long on equities, short volatility, short US treasuries and very long complacency,” he said. “The question we ask today for Asia is really around why buy risk here, why buy equities?” It is a question most traders will likely be asking on their lunch break given the soft lead from Wall Street and drops of 3.6 and 1.8 per cent for iron ore and oil, respectively. The biggest drags were the big banks, after their US peers faced heavy selling pressure overnight, and resources, following the commodity sell-off. In banking, the big four were all off over 1 per cent, with Westpac the laggard in slumping 2.2 per cent and NAB leading the way thanks to a more modest 1.4 per cent descent. “The big banks were absolutely hammered in the US which doesn’t bode well for the local sector this morning,” Mr McKenna said.
In materials, BHP Billiton dived 2.1 per cent to $24.12, while Fortescue plunged 4.6 per cent to $6.315 and Rio Tinto surrendered 2.6 per cent to $60.01. In energy, softer oil markets forced Santos down 1.9 per cent to $3.64, while Woodside lost 1.7 per cent to $30.705. Goldman Sachs warned that OPEC’s supply cut last year may have inadvertently underwritten shale activity in the US, to the detriment of hopes for a significant price rally. “And the signal OPEC is sending is that shale can continue to invest in productive capacity because OPEC is going to underwrite the price,” Mr McKenna added. The property sector performed admirably as bond yields fell, with Stockland rising 1.1 per cent, Dexus jumping 1.4 per cent and Scentre tacking on 0.2 per cent. Elsewhere, Nufarm stood out in shooting up 6 per cent following a strong half-year update, while Bellamy’s surged another 5 per cent and Blackmores advanced 1.5 per cent as traders continued to celebrate news Chinese e-commerce laws won’t get much tougher in the near-term. Among blue chips, telco giant Telstra weakened 1 per cent to $4.565, while national carrier Qantas backtracked 1.2 per cent to $3.795. Meanwhile, the Australian dollar was trading around US76.65c, sliding noticeably this morning as commodities returned to the doldrums. It was trading around US77.4c last night.
