The S&P/ASX 200 slumped on the open, after absorbing the S&P downgrade over the weekend, then recovered somewhat but has now rolled over again after lunch. The market is down over 73 points or nearly 2% and stands at 4031 points.
Other Asian markets are experiencing similar sharp losses, with the Nikkei 225 down 1.3% at 9178 points, and the Hang Seng falling further, down 3.6% at 20174 points.
Other risk assets are having mild falls, with the AUD just below 1.04 against the USD. Gold has rallied strongly – probably on news the ECB will be buying EU member state bonds – and hit an all time record high of $1697 USD an ounce, but has come back a bit to $1695. WTI crude continues to fall, now down almost 3% to $84.40 USD per barrel.
Movers and Shakers
It’s still red across the board, with all sectors falling, although energy and IT sectors are off only slightly. The banks are down between 1 and almost 2% although CBA is barely down, possibly on anticipation of results later this week. Macquarie (MQG) was actually up in early trade but has since slipped 0.5%.
The resource twins BHP and RIO are again the main suspects in pushing the index into deep negative territory, down 2.6% each. Cochlear (COH) and CSL – are down 1.5% and 2.5% respectively, although management must be welcoming the continued weakness in the AUD.
Today’s Chart
I’m reverting back to a daily chart because it might give some hope. Even though the market went down 2%, there is a slim possibility of a “surprise” rebound in the days to follow. The long tail on today’s candle is usually the precursor to a stabilisation, or an arrest at least in large price falls.
Daily candle chart of ASX200 - with 260 day moving average (grey line)
Looking toward the weekly chart, note that prices are now at the post-GFC support level of 4100 points (I contend the lower level was an oversold condition and that this level represents the real “bottom” of the GFC, at least for now)
Weekly chart of ASX200 - note support and resistance lines
The Australian market will be going through some high volatility in the month ahead because of the full year earnings season (Australian companies only report twice a year), which will add to the overall market bipolar behaviour.
Local earnings season continues – today Bendigo and Adelaide Bank (BEN) and JB Hi-Fi (JBH) are reporting. Remember to bookmark the overall update here.