Australian investors are in for another torrid day of selling after share prices were slaughtered in overnight trading. European markets dropped around 5%, and US markets outstripped even those drops at their opening, before rallying back to 3-4% falls.
Futures markets are pointing to carnage at the open, with falls in oil, gold and copper likely to add weight. Circuit breakers are available, but won’t halt the initial bloodbath.
The drivers of the selling are not simple. Some analysts are pointing to a stronger USD threatening fragile emerging market economies, others point to weaker China manufacturing data and a 36% fall in the Shanghai composite index. The nebulous nature of the selling makes predicting a target point for markets very difficult. The continuing falls in copper and oil point to a souring of global industrial sentiment.
Reporting season continues, and any company disappointing investors today could experience severe share price punishment. For this reason, Pacific Brands and Senex Energy shareholders may be on alert. Other major reports today include BHP, Oilsearch, Village Roadshow and Spotless Group, although top down selling may overwhelm any good corporate news.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.