Aust stocks close sharply lower

Local market slips below 5,100 level as RBA removes easing bias, Wall St slumps on weak manufacturing data.

The Australian stock market closed heavily in the red, following the Reserve Bank of Australia's removal of its easing bias and a Wall Street slump on weak manufacturing data from the United States and China.

At the 1615 AEDT official market close, the benchmark S&P/ASX200 index fell 1.75% to 5,097.1 points, while the broader All Ordinaries index declined 1.69% to 5,114.1 points.

IG chief market strategist Chris Weston said the benchmark index fell below the 5,100 level after the RBA removed its mild easing bias in its February board meeting minutes this afternoon, where it left the official cash rate on hold at a record low of 2.5%.

But traders have been undertaking fairly good two-way trade, Mr Weston said.

"If you take the Commonwealth Bank of Australia for example we’ve actually seen better business on the buy side, with 67% of all opening positions going long or looking to profit from a bounce," he said.

Mr Weston also noted a fall in the Nikkei, saying sentiment continues to deteriorate.

"The market feels like it's been hit by a freight train and traders are asking what exactly is going on," he said.

"What started out as a profit taking exercise has steamrolled into something far more substantial."

In the US, at the closing bell, the Dow Jones Industrial Average declined 326.05 points, or 2.08%, at 15,372.80.

The S&P 500 shed 40.70 points, or 2.28 per cent, to 1,741.89, while the Nasdaq Composite Index declined 106.92 points, or 2.60 per cent, to 3,996.96 points.

Data earlier showed that China's purchasing managers index for manufacturing, fell to 50.5 in January from 51.0 in December and 51.4 in November.

The Institute for Supply Management reported that US manufacturing activity fell sharply in January, sinking to 51.3 from 56.5 in the previous month.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles