This was published 4 years ago
No two ways about it, the market copped a bit of a spanking today. Futures are also pointing to another weak session tonight.
Alex Druce and Lucy Battersby will be back in the morning to bring you all the news from Wall Street.
Until then, have a great night.
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The Australian sharemarket shed $40 billion Monday as investors dropped banking stocks like hot potatoes just a few days after the sector was trading at record high prices.
The ASX200 fell by as much as 2.1 per cent at one point to 7216 in the biggest one-day fall since mid-May, following similar moves on Wall Street on Friday.
The market closed 1.8 per cent lower at a near three-week low of 7235.3 points.
There was a hint of contagion from Japan, where the Nikkei dropped as much as 4 per cent after strong hints the US Federal Reserve could start raising interest rates a year earlier than expected.
The ASX 200 had its worst session in about a month as the market shed $40 billion, hitting a near three-week low as the banks and miners sagged.
The benchmark index dropped 133.6 points to close at 7235.3, and at one point was 2.1 per cent lower at 7216.6.
Investors continued to cycle out of value stocks and towards growth names as the reflation trade that has dominated the market this year faded further.
Wall Street’s lead was weak, while US futures remained in the red at the ASX close.
Billionaire Kerry Stokes’ Seven Group Holdings has taken takeover target Boral to task for selling its US building products business at a loss, saying the company’s management should have secured a better price for the asset.
Seven Group is the largest shareholder of ASX-listed Boral, which on Monday said it has signed a deal with to sell its North American business for $US2.15 billion ($2.9 billion).
Boral is also fending off a $8 billion offer from Seven Group as the conglomerate looks to lift its stake in the company from 24 per cent to 30 per cent.
Boral shares were up 1.6 per cent to $6.89 in the final 20 minutes of trade on Monday.
A loss of $38 billion - while not exactly a positive - is a darn sight better than the depths the ASX 200 reached earlier today.
The local index was 1.7 per cent down in the final hour of trade, and heading for its worst session in about a month. The heavyweight banks and miners remained deep in the red.
But as we’ve seen today - it could be worse.
Earlier, the market earlier fell by as much as 2.1 per cent - shedding $45 billion from its market cap - as it hit a three-week low of 7216.6.
Australia’s three biggest listed gold miners pushed ahead in afternoon trade as the precious metal bounced off a near two-month low.
After a weak start, Newcrest Mining has risen 0.5 per cent to $26.11, while Northern Star was up 0.3 per cent to $9.92, and Evolution was 0.2 per cent higher at $4.68.
Still, there wasn’t much joy for the smaller prospectors, with Regis, Perseus, Silverlake, and Ramelius Resources all in the red.
The rise for the big three gold miners of the ASX comes as the precious metal improves from a trough of $US1,761 per ounce over the weekend.
US Treasury 30-year yields dropped below 2 per cent for the first time since February as traders continued to unwind reflation trades after the Federal Reserve’s hawkish pivot.
Thirty-year yields fell two basis points to 1.99 per cent, while benchmark rates declined as much as three basis points to 1.40 per cent, lowest since early March. Short-end yields edged up.
The spread between five- and 30-year notes tumbled last week to the narrowest for the year after the Fed projected two interest-rate increases by the end of 2023. The flattening move was aided by a scramble to unwind curve steepeners, with the likes of Morgan Stanley and TD Securities stopped out of recommended trades, while Goldman Sachs analysts unwound outright 30-year short positions.
The shift creates room for other central banks to turn more hawkish without fueling excessive gains in their currencies, triggering a flattening in the yield curve elsewhere. Australia’s three- and 10-year spread is at the tightest since February and a similar trend was observed in New Zealand.
The FOMC’s rate outlook has pushed short-end rates higher while longer-end rates fall as traders calculate that there’s now little risk that U.S. inflation will remain above target for long. St. Louis Fed President James Bullard added fuel to the debate on Friday, warning that inflation risks may necessitate a rate hike next year.
Bloomberg
Opinion
China’s latest effort to try to dampen soaring commodity prices is likely to have as fleeting an impact as its last.
Last week China announced plans to release government reserves of some key commodities – including copper, aluminium and zinc (but not iron ore) – to counter high prices and some supply shortages that are driving up raw material costs for its manufacturers.
That followed last month’s crackdown on excessive speculation, “fake news,” hoarding, price-fixing and other activities in commodities futures markets, along with efforts to lower steel production and therefore demand for iron ore and other steel-making ingredients.
Some ‘forward sizzle’ about a strong second-half performance has piqued investor interest in management software firm Integrated Solutions, which was trading more than 10 per cent higher on the ASX.
The $330 million company - which provides performance monitoring, diagnostics and management software for business-critical computing - was up by as much as 10.5 per cent to $2.09 on this morning’s buoyant trading update.
The company bounced off a near 30-month low on expectations it will record a stronger second-half revenue, although its full-year result is still expected to be down on the 2020 figure.
The company this morning said second-half revenue this year is expected to be in the range of $40 million to $45 million, up from $34.1 million in the first half, but down on $57.7 million recorded in the second half of 2020.
Victoria’s recent lockdown to stop the spread of the coronavirus was not enough to stop shoppers nationally from opening their wallets through May.
Preliminary retail data from the Australian Bureau of Statistics on Monday showed a 0.1 per cent increase for last month. However, the market was expecting to see growth of 0.4 per cent.
Retail sales dipped by 1.5 per cent in Victoria but this was offset by similar sized increases in both Queensland and Western Australia. Victorians slashed spending across all sectors bar food retailing which jumped by 4 per cent as residents went on a lockdown inspired spending spree.
Nationally, food retailing lifted by 1.5 per cent. There were falls, however, of 1 per cent in household goods and of 1.5 per cent for clothing, footwear and personal accessories.