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Stocks tumbled to a ten-week low as a setback in the quest for a coronavirus vaccine compounded a third night of heavy falls on Wall Street.
At mid-session, the S&P/ASX 200 was down 154 points or 2.6 per cent after sinking to its weakest level since June 30.
Just seven companies on the index bucked a vicious downtrend after the Nasdaq Composite entered a technical correction overnight and hopes for a Covid-19 vaccine were dented by a delay in UK trials for a leading candidate after a patient suffered an adverse reaction.
What’s driving the market
US stocks tumbled for a third straight session as selling resumed following after the Labor Day long weekend. The Nasdaq Composite dived 4.11 per cent to extend its three-session loss into double digits, meeting the technical definition of a correction. The broader S&P 500 shed 2.78 per cent.
One of two potential vaccines secured by the Australian government in a deal announced earlier this week ran into trouble this morning when trials had to be suspended after a patient suffered an “unexplained illness”. AstraZeneca announced it had “voluntarily paused” the trial while an independent committee reviewed the “single event”. The federal government had secured 33.8 million doses of the vaccine, pending trial success.
Oil slumped to its weakest level since June overnight after Saudi Arabia cut its crude prices for Asian customers in a sign of demand problems. The Australian energy sector skidded 3.8 per cent to its lowest point since May. Oil Search shed 6.2 per cent, Santos 5.3 per cent and Woodside 4.2 per cent.
Going up
Winners were scarce, particularly at the top end of the market: all 20 component companies of the ASX 20 declined (see below for more).
Companies related to primary production fared better than most. Fertiliser manufacturer Nufarm climbed 2.9 per cent and poultry producer Inghams 1.5 per cent.
The other winners were IPH +2.5 per cent, GUD Holdings +1.4 per cent, Perseus Mining +0.3 per cent, Polynovo +0.2 per cent and Mineral Resources +0.1 per cent.
The dollar ticked higher. The Aussie edged up 0.12 per cent to 72.18 US cents after shedding almost 1 per cent overnight.
Consumer sentiment unexpectedly improved as Australians apparently looked beyond the Victorian lockdown and confirmation that the country slid into recession last quarter. Westpac’s consumer sentiment index climbed 18 per cent to 93.8 this month from 79.5 in August.
Going down
The tech sector shed 2 6 per cent, broadly in line with US market trends overnight. Appen lost 4.2 per cent, Afterpay 0.9 per cent and WiseTech 2.9 per cent.
Falls at the top end of the market ranged from 4.1 per cent for Brambles to 0.6 per cent for Rio Tinto. Among the big four banks, ANZ and Westpac gave up 3.4 per cent, NAB 3.1 per cent and CBA 2.8 per cent. Miners fared better: BHP declined 2.1 per cent, Newcrest 1.3 per cent and Fortescue Metals 2.4 per cent.
Nine Entertainment and Brambles both shed 4.1 per cent as they traded without their dividends.
Other markets
Asian markets mirrored much of the weakness on Wall Street. China’s Shanghai Composite slid 1.8 per cent, Hong Kong’s Hang Seng 1.5 per cent and Japan’s Nikkei 1.6 per cent. S&P 500 index futures were neutral.
The plunge in oil continued this morning. Brent crude dropped another 16 cents or 0.4 per cent to $US39.62 a barrel. Gold slumped $11 or 0.6 per cent to $US1,932.20 an ounce.
What’s hot today and what’s not
Hot today: Tech stocks provided many of the extremes this morning, from heavy losses to major gains. Momentum traders jumped on semiconductor developer 4DS Memory (ASX:4DS) after the stock broke technical resistance. 4DS, which is working on enterprise-grade storage memory, surged from 5 cents to 7.4 cents and was lately up 32 per cent at 6.6 cents. While there was no specific news to trigger the run, interest in the sector has been sharpened by the rise of BrainChip (ASX:BRN), which has seen its shares more than quintuple from 16.5 cents last month to a high of 97 cents this morning, BrainChip last week announced a collaboration with US company VORAGO Technologies to develop a processor for use in space flight.
Not today: Investors dumped PharmAust (ASX:PAA) after US giant Elanco Animal Health opted against exercising an option to use PharmAust’s intellectual property for treating cancer in animals. PharmAust did not provide an explanation for the decision. The news overshadowed success in a second round of in-vitro testing of the company’s anti-viral drug candidates for possible applications against Covid-19. The share price sank 27.6 per cent.
