After a reprieve a day earlier, sellers returned to push the local sharemarket lower in early trade on Wednesday. The ASX 200 opened the session with a loss of 5 points before trading 51 points lower at the worst levels of the session.
Utilities and Property Trusts were the only two ASX sectors to trade higher over the morning. By contrast, Information Technology & Healthcare led the declines, whilst there were appreciable declines seen for Materials, Energy and Consumer Discretionary names.
Participation in the pullback was modest with 1.3 billion transactions measured by the ASX valued at $2.65 billion. At lunch 371 shares were higher, 669 were higher and 342 were unchanged.
The inspiration for Wednesday’s weaker tone came from a broad selloff for US equities overnight, which was led by the NASDAQ. A key factor in the weakness of tech names has been the focus on organisations most vulnerable to “privacy regulation”, particularly in the social media space. This was reflected in the 11% decline in Twitter shares overnight, and a 4.5% retreat in Facebook stock – among others. At the close of US trade, the Dow Jones index was down by 344 points or 1.4%. The S&P 500 index had fallen by 1.7% and the Nasdaq fell by 211 points or 2.9%.
Miners were generally under pressure despite firmer metals prices overnight. For example, bulk iron ore miners were lower despite a modest rise in iron ore prices overnight. Fortescue Metals Group (FMG) remained under pressure falling by 4% after downgrading realised price forecasts for iron ore a day earlier. South 32 (S32) shares were at $3.23 for a loss of 5 cents or 1.2%
Rio Tinto’s (RIO) divesture of coal assets has continued with the announcement it had sold its 80% stake Queensland’s Kestrel coal mine for $2.25 billion. The atake was purchased by a consortium comprising of private equity and Indonesian interests. The transaction will bring the total amount generated from recent divestments of Rio Tinto’s Queensland coal assets to $4.15 billion, The miners says the funds will be used for general corporate purposes.
Energy names were lower across the board. Oil prices eased overnight despite Saudi Crown Prince Mohammed bin Salman indicating that Saudi Arabia and Russia are considering a 10-20 year agreement to curb crude oil supply. Santos (STO) shares were at $5.15 for a loss of 3 cents or 0.6%, Oilsearch (OSH) was at $7.19 for a loss of 17 cents or 2.3%.
Major currencies have been mixed against the US dollar in the last 24 hours. The Aussie dollar rose from lows near US77.12 cents and was trading near US77.45 cents in late US trade. Early Asian trade saw the local unit lower at 76.90 US cents.
Published by CommSec