WOW drags stocks deeper into the red
Aussie Shares dusted off overnight leads and switched to losses in early trade. The AGM and quarterly update season gave traders a reason to exit their exposures.
The financials and supermarket giants were the target of enthusiastic selling across the session. Investors traded WOW down almost 10%.
Investor’s panicked themselves in a rush to mass-exit both Woolworths and Wesfarmers following WOW’s brutal profit forecasts. Woolworths warned of a potential 35% drop in the first half net profit with the supermarket already struggling to claw back market share from its peers Wesfarmers and international threat ALDI.
Inter-sector rotation appeared to be at play with recent reporting banks NAB and ANZ also on the receiving end of position closures. Investors voted with their feet with both banks enduring a heavy sell off across the trading day, NAB shed 4% and ANZ dusting 2%. The other two big banks CBA and Westpac both oscillated in mild green, suggesting inter-sector switching.
In afternoon trading the local bourse gave up about 1.3%. Notable volumes have returned to the markets with the FOMC making it clear that a December rate hike is a live option. The local currency is positioned dead on the 0.71 handle following USD strength overnight. Any support for the local currency could possibly come when a second offering of inflation data is released on Friday.
Frequently Asked Questions about this Article…
Woolworths' stock dropped by almost 10% due to a brutal profit forecast, warning of a potential 35% drop in first-half net profit. This caused investors to panic and exit their positions.
Woolworths' profit forecast led to a mass exit by investors, not only affecting Woolworths but also causing a sell-off in Wesfarmers. This contributed to the overall decline in the market.
The financial sector saw significant selling, with banks like NAB and ANZ experiencing heavy sell-offs. NAB's stock shed 4% and ANZ's stock dropped by 2% during the trading session.
Inter-sector rotation refers to investors shifting their investments from one sector to another. In this case, it led to position closures in banks like NAB and ANZ, while CBA and Westpac saw mild gains, indicating a switch in investor focus.
In the afternoon trading session, the local bourse gave up about 1.3%, reflecting the overall negative sentiment in the market due to the sell-off in major stocks like Woolworths and the banks.
The local currency is positioned at 0.71 against the USD, influenced by USD strength overnight. Potential support for the currency could come from the release of inflation data on Friday.
The FOMC has indicated that a December rate hike is a live option, which has contributed to the market's volatility and influenced investor decisions, particularly in the financial sector.
Woolworths is struggling to regain market share from its peers, including Wesfarmers and international competitor ALDI, which is contributing to its challenging financial outlook.
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