Shares Slammed
Unfortunately timed data has kicked the Australian share market where it is technically vulnerable. After repeated failures by the index to break through the 6,000 level, local investors have seized on the negative overnight action and slammed the market, pushing the index under 5,900. Volatility is up, and every sector in the red, albeit on light and unconvincing volumes.
Worryingly, the dramatic falls in US shares are pointing to a sea change in sentiment. Previous poor data spurred buying, as investors speculated weaker economic indicators pushed back the Fed’s tightening timetable. The fall in February durable goods orders reported overnight instead saw investors bail out, possibly reflecting the near record highs of US shares. Whatever the cause, it is evident that bad news is now bad news again.
There is little economic reasoning behind today’s local action. The two worst performing sectors, property and consumer discretionary, come from opposite sides of the growth exposed / defensive divide. The situation at the opposite end of the performance table is the same, where defensive utilities are keeping company with growth exposed energy stocks. A higher Australian dollar is sideling international investors and exacerbating the situation.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
The Australian share market dropped below the 5,900 level due to unfortunate timing of negative data and a failure to break through the 6,000 level. This led local investors to react to the negative overnight action, causing a market downturn.
The property and consumer discretionary sectors were the worst performers during the recent market downturn. Interestingly, these sectors are on opposite sides of the growth exposed and defensive divide.
The dramatic falls in US shares indicated a change in sentiment, where bad news is now perceived as bad news again. This shift in sentiment contributed to the negative reaction in the Australian share market.
A higher Australian dollar sidelined international investors, exacerbating the market's downturn and contributing to the overall negative sentiment.
Volatility is up due to the market's reaction to negative data and the failure to break through key index levels, leading to increased uncertainty among investors.
Despite the overall market downturn, defensive utilities and growth-exposed energy stocks managed to perform relatively better compared to other sectors.
The recent market action suggests a shift in investor sentiment, where negative economic indicators are now leading to sell-offs rather than speculative buying, reflecting a more cautious approach.
For further insights into the market situation, you can contact Michael McCarthy at CMC Markets by calling 02 8221 2135.
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