US government wrangling puts market under pressure
The Republicans and Democrats are struggling to strike a deal to keep government money flowing. President Barack Obama warned if an agreement could not be made it would force a partial government shutdown of services deemed non-essential.
The warring words sparked broad-based selloffs across global sharemarkets. Australia's benchmark S&P/ASX 200 Index fell 88.2 points, or 1.7 per cent, to 5218.9.
Finance stocks were among the worst hit during Monday's selloff. Commonwealth Bank plummeted 2.3 per cent to $71.50, while ANZ weakened 1.9 per cent to $30.93.
But Macquarie Private Wealth divisional director Martin Lakos said the losses were on slim volumes. "It's a big one-day fall. There has been a little bit of risk-off taking place," Mr Lakos said.
"But we've had about $2 billion turnover. That's half the daily average for the quarter. It certainly suggests that that's not a strong commitment to the downside."
Despite the slide into negative territory, the ASX finished the September quarter up 8.7 per cent, its best result since 2009.
St George Bank economist Janu Chan said a reversal of expectations of the growth of China, Australia's biggest trading partner, had fuelled optimism.
Fortescue Metals was among the biggest winners for the quarter, advancing 56.3 per cent, while fellow miner Arrium leapt 56.4 per cent.
Gold stocks also enjoyed a strong rally, particularly after the US Federal Reserve delayed tapering its $US85 billion-a-month asset buying program. Beadell Resources was up 84 per cent, while Evolution Mining firmed 48.25 per cent.
ANZ head of commodity strategy Mark Pervan said during the middle of the year it was widely expected that Chinese growth for the full year would disappoint. Mr Pervan expected China's economy to continue to moderately improve in the fourth quarter, which would flow through to the ASX.
Some defensive stocks were also caught in Monday's selloff. Blood products maker CSL dived 2.6 per cent to $64, while Telstra eased 1 per cent to $4.97. Wesfarmers, the owner of Coles and Bunnings, slid 1.4 per cent to $41.13.
Frequently Asked Questions about this Article…
The article says concerns about a possible US government shutdown — with Republicans and Democrats struggling to agree on funding — sparked broad global selloffs that pushed Australia’s S&P/ASX 200 down 88.2 points (1.7%) to 5,218.9.
Finance stocks were among the worst hit: Commonwealth Bank fell 2.3% to $71.50 and ANZ weakened 1.9% to $30.93, according to the article’s market report.
According to Macquarie Private Wealth divisional director Martin Lakos, the one-day fall was on slim volumes — about $2 billion turnover, roughly half the daily average for the quarter — suggesting limited commitment to the downside.
The ASX finished the September quarter up 8.7%, marking its best quarterly result since 2009, despite the slide into negative territory on the day covered in the article.
Miners and gold stocks led gains: Fortescue Metals advanced 56.3% and Arrium jumped 56.4% for the quarter. Gold stocks also rallied after the US Federal Reserve delayed tapering; Beadell Resources rose 84% and Evolution Mining gained 48.25%.
The article notes the US Federal Reserve delayed tapering its US$85 billion-a-month asset buying program, which helped fuel a strong rally in gold stocks and supported broader market optimism.
St George Bank economist Janu Chan said a reversal of expectations around Chinese growth had fueled optimism. ANZ’s head of commodity strategy Mark Pervan expected China’s economy to moderately improve into the fourth quarter, which he said would flow through to the ASX.
Some defensive stocks were caught up in the selloff: CSL fell 2.6% to $64, Telstra eased 1% to $4.97, and Wesfarmers slid 1.4% to $41.13, per the article’s market summary.
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