Shares fall as investors show whites of eyes again
The benchmark S&P/ASX 200 Index fell 89.9 points, or 1.9 per cent, to 4744.1. The All Ordinaries lost 82.5 points, or 1.7 per cent, to 4727.8. This follows a 1.9 per cent drop on Monday and a 2.6 per cent surge on Tuesday on the ASX 200.
Bell Potter director Andrew Bell said the market had "passed through the confession season for companies".
With reporting season approaching next month, investors have been reacting mainly to economic news and speculation.
All major sectors slid on Wednesday, with materials taking the biggest hit, down 2.7 per cent.
An official survey of China's services sector dropped to a nine-month low, with a reading of 53.9. A mark above 50 indicates expansion.
Mining stocks suffered the most, with BHP sliding 3.2 per cent to $31.05. Rival Rio Tinto dropped 3 per cent to $51.50.
Shares were also licking their wounds as overseas investors looked to cut their losses as the dollar continued to weaken.
Mr Bell said a move for the dollar under US90¢ was imminent, given commentary from the RBA.
"If that is orderly, equity markets could be orderly. But if there was a sense of panic or quick movement from the currency, you could well see a flow-through effect into other asset classes," Mr Bell said.
Any negative implications on equities would be temporary, however, with companies that had struggled to manage with the high dollar getting some reprieve, he said.
In late trade, the dollar fell to a 34-month low of US90.58¢.
Also weighing on the market was data showing retail sales remained soft in May. Seasonally adjusted retail sales lifted 0.1 per cent in May, falling short of economist expectations of a 0.3 per cent rise. Revised-down numbers for March and April also spooked investors.
Wesfarmers was one of the biggest losers, falling 2.6 per cent to $38.68. Woolworths lost 2 per cent to finish at $32.27. Westpac shed 2.6 per cent to $27.67 and ANZ slipped 2.1 per cent to $27.87. NAB was down 1.8 per cent at $28.72, while Commonwealth Bank inched 0.5 per cent lower to $68.53.
Frequently Asked Questions about this Article…
The market fell almost 2% largely because investors reacted to renewed fears of a slowing China and softer-than-expected domestic retail sales. The S&P/ASX 200 fell 89.9 points (1.9%) to 4,744.1 and the All Ordinaries lost 82.5 points (1.7%) to 4,727.8, with all major sectors sliding.
An official survey showed China's services sector reading dropped to a nine-month low of 53.9, which dented sentiment. Materials and mining stocks were hit hardest — BHP slid 3.2% to $31.05 and Rio Tinto fell 3.0% to $51.50 — reflecting sensitivity to weaker Chinese demand.
Australian retail sales lifted only 0.1% in May, below economists' 0.3% expectation, and revisions to March and April were downgraded. That softer-than-expected consumer data spooked investors and contributed to the equity sell-off.
Several big names fell: Wesfarmers dropped 2.6% to $38.68, Woolworths lost 2.0% to $32.27. Among banks, Westpac fell 2.6% to $27.67, ANZ slipped 2.1% to $27.87, NAB was down 1.8% at $28.72 and Commonwealth Bank eased 0.5% to $68.53.
The Australian dollar fell to a 34‑month low of around US90.58 cents. Bell Potter director Andrew Bell said a move below US90¢ was imminent given RBA commentary. A gradual, orderly fall could be manageable for equity markets, but a rapid currency move could ripple into other asset classes — while some companies that struggled with a high dollar may gain relief.
Analysts note the market has 'passed through the confession season for companies' and that reporting season is approaching next month. With reporting not yet in full swing, investors are mainly reacting to economic news and speculation rather than company results.
Materials was the worst performer, down about 2.7% on the day, driven by weaker China data and falls in major miners. Everyday investors should care because sector swings like this can affect diversified portfolios, especially those with heavy exposure to mining and materials stocks.
Investors should watch upcoming reporting season, further Chinese economic indicators (especially services and demand data), future retail sales releases, and currency moves tied to RBA commentary. These factors were cited in the article as key drivers of recent market moves and investor sentiment.
Call 1300 880 160
Start a chat
Schedule a call
