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Spring hit the share market like a wrecking ball, smashing stocks down 2.5 per cent to a four-week low before a tentative partial recovery.
The S&P/ASX 200 crashed 151 points by mid-morning, falling below 6000 for the first time since August 7. A tentative rebound helped trim the carnage to 121 points or 2 per cent at the halfway mark of the session.
All eleven sectors slumped as fund managers rebalanced their portfolios at the start of a new month. The ASX 200 rallied 2.2 per cent during August despite losing momentum towards the end of the month as the dollar appreciated against the greenback. Today’s decline was the index’s third in a row.
What’s driving the market
The Aussie hit a two-year high overnight, climbing above 74 US cents for the first time since August 2018.. The local unit was last up 0.42 per cent at 74.07 US cents. A strong dollar raises the cost of Australian exports for overseas buyers and offers overseas investors in the ASX potential currency-derived profits.
The Reserve Bank met this morning and was due to release a policy statement and any change to the cash rate at 2.30pm EST. While no major changes were anticipated, currency traders awaited any indications that a rebounding economy might affect the central bank’s accommodative policy outlook
Wall Street closed mixed on the last session of a strong month. The S&P 500 and Dow Jones Industrial Average retreated, while the Nasdaq continued its record run. Despite the setbacks, the S&P 500 and Dow had their best August returns since the mid-Eighties.
Going down
Tech, energy and financials all shed more than 2.6 per cent. Tech leader Afterpay tumbled 7.3 per cent despite a broker price target increase from Citi.
Woodside Petroleum declined 2.6 per cent despite a positive morning on energy markets. Brent crude bounced 45 cents or 1 per cent to $US45.73 a barrel. Origin Energy dropped 3.6 per cent and Santos 4.2 per cent.
All 20 components of the S&P/ASX 20 index of market heavyweights retreated. Falls ranged from 3.3 per cent for Suncorp to 0.5 per cent for IAG. The big four banks shed between 2.2 and 3.2 per cent. BHP eased 1.3 per cent and Rio Tinto 0.9 per cent. Telstra sank 1.2 per cent to an 18-month low.
Insurer QBE slumped 5.9 per cent following news Group CEO Pat Regan will leave following an external investigation into workplace communications. The Board concluded Regan had failed to meet the standards of the Group Code of Ethics and Conduct. Group Chairman Mike Wilkins will take on day-to-day oversight of operations until a new CEO is appointed.
Going up
Winners were scarce this morning. Just four from 200 companies on the benchmark index advanced more than 2 per cent. A rise of 4.6 per cent put Seven West Media on top of the index. Fruit and veg wholesaler Costa Group put on 2.5 per cent, climbing for a third session following last week’s well-received trading update. Waste manager Bingo Industries added 2 per cent and builder Lendlease 2.2 per cent.
Biotech Starpharma climbed 13.5 per cent to an all-time high on news it had developed a water soluble version of Gilead Sciences’ remdesivir antiviral drug, a leading candidate for the treatment of Covid-19. The company says the development would allow the drug to be administered outside hospitals.
Other markets
Asian markets were mixed but little changed. China’s Shanghai Composite and Hong Kong’s Hang Seng eased 0.2 per cent. Japan’s Nikkei edged up 0.1 per cent. S&P 500 index futures gained three points or 0.1 per cent.
Gold added to overnight gains. The yellow metal rose $11.30 or 0.6 per cent to $US1,989.90 an ounce.
What’s hot today and what’s not
Hot today: New customers and increased spending from existing customers in the US helped Pointerra (ASX:3DP) climb to its highest level in more than six years. The 3D data specialist announced the annual value of its contracts with US utilities had increased by 39 per cent in one month. The company provides six US utilities with analysis and management of 3D data. The share price jumped 37 per cent to its highest level since May 2014.
Not today: The booming buy now pay later group of companies suffered a setback with heavy falls this morning. Afterpay (ASX:APT) was the worst performer on the ASX 200, sliding 7.3 per cent. Sezzle (ASX:SZL) tumbled 11.1 per cent, Z1P (ASX:Z1P) 10.7 per cent, Openpay (ASX:OPY) 6 per cent and Splitit (ASX:SPT) 4.3 per cent.
