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Australian shares are off to a rough start Monday, with the ASX 200 down 1.2 per cent following a massive inflation induced pullback in US markets on Friday. Almost all sectors are slipping by more than 1 per cent while softer commodity prices are dragging mining and energy stocks down most. It is important to mention that Aussie equities hit three-highs on Friday and have been building up healthy momentum recently. Encouragingly the losses have bottomed out at lunch (i.e. the market’s falls have not substantially worsened in the past hour).
American stocks slumped by 2.5 per cents – the worst day in eight months – on Friday. This was triggered by better economic data, with 200,000 jobs added in January but more importantly signs that wages are growing at a faster than anticipated pace (2.9 per cent over the year/eight-year high). This has created some concerns this could lead to higher inflation. That was enough to push the US dollar higher with interest rates while stocks fell back. Keep in mind that US markets have been hitting record highs almost daily for the past 12 months.
Wesfarmers (WES) is a major weight, down 4.7 per cent after warning of massive impairment/writedowns ~$1.2bn on its Bunnings unit in the UK and Ireland together with its Target stores in Australia. WES is set to post its profits results in a fortnight.
Fairfax (FXJ) said it will appeal the New Zealand High Court decision to oppose a merger between its New Zealand operations and rival NZME.
Brickworks (BKW) is up 1.5 per cent after the building products provider had its price target raised by a broker.
Xero (XRO) begins sole trading on the ASX today (the Kiwi company used to also trade on the New Zealand stock exchange). Argo Investments (ARG) has announced a 6.2 per cent lift in earnings to $110.5m driven by an 8.4 per cent lift in dividends paid by companies.
The number of job advertisements rose by 6.2 per cent in January following a revised 2.7 per cent slide in December. This is a further sign the job market should remain strong moving forward.
The results of a survey of private sector business activity will be released in China at 12.45pm (AEDT).
2.7bn shares have changed hands so far today worth $2.5bn. 148 stocks are up, 1109 are down and 275 are unchanged. The losses are widespread across all sectors.
Originally published by CommSec