Aussie Stocks Claw Back to a Flat Finish
Australian investors shrugged off record highs from Wall Street as the local bourse dipped into red shortly after open. Volumes remain skinny for Thursday trade, which might suggests any selling activity is not met with strong conviction.
Despite iron ore making ground overnight, the major iron ore producers faced a savage sell off at lunch time. BHP and its mini me spin-off South32 both fell over 2% during the session. Material based stocks lost 1% as a sector, with the exception of Fortescue Metals which oscillated in green throughout the session. After the stock’s meteoric 10% ascent on Tuesday, traders are still holding onto whispers of a potential Chinese take over, despite Andrew Forrest’s denial.
The big banks also endured early selling pressure for the second session this week. Investors took the opportunity to take profit following the bank buying bonanza we observed earlier this week. In afternoon trading, both Westpac and ANZ both reverted back to green territory, helping to lead the local bourse back towards a flat finish.
Australian business spending for the March quarter came in unexpectedly weak, failing by 4.4%. This sent the AUD into immediate free fall, dropping over half a cent to cross below the 0.77 handle, the first time in over five weeks. The dollar’s re-entry back into 0.76 ranges might be tested with unemployment claims due out in the US overnight.
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Frequently Asked Questions about this Article…
Australian stocks dipped into the red shortly after opening, even though Wall Street hit record highs. This suggests that local market dynamics, such as profit-taking and sector-specific pressures, played a more significant role than global trends.
Despite iron ore prices making gains overnight, major producers like BHP and South32 faced a sell-off, dropping over 2% during the session. This could be due to market volatility and investor sentiment rather than fundamental changes in the iron ore market.
Unlike other material-based stocks that lost 1% as a sector, Fortescue Metals managed to oscillate in green throughout the session. This resilience might be linked to ongoing speculation about a potential Chinese takeover, despite denials from Andrew Forrest.
The unexpectedly weak Australian business spending for the March quarter, which fell by 4.4%, led to an immediate drop in the AUD. The currency fell over half a cent, crossing below the 0.77 handle for the first time in over five weeks.
The big banks, including Westpac and ANZ, faced early selling pressure as investors took profits from earlier gains. However, both banks managed to revert back to green territory in afternoon trading, contributing to the local bourse's recovery towards a flat finish.
The Australian stock market clawed back to a flat finish due to a combination of factors, including the recovery of big banks like Westpac and ANZ, and the mixed performance of material-based stocks. Despite early selling pressure, these elements helped stabilize the market.
The AUD's movement is significant because it reflects investor sentiment and economic conditions. The recent drop below the 0.77 handle, influenced by weak business spending, indicates potential volatility, especially with upcoming US unemployment claims.
Investors should keep an eye on the AUD's performance, especially with US unemployment claims due out soon. This data could further influence the currency's movement, potentially testing its re-entry into the 0.76 ranges.
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