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The ASX 200 posted steep losses in opening trade on Thursday as domestic participants responded to unsettling declines for US equity markets overnight. Most notably the Dow Jones and S&P 500 each registered their biggest single day falls since early February of this year. At the same time the Nasdaq delivered its largest one day decline since June of 2016. Initial trade saw the ASX 200 move through the 6000 to trade at 5912 and a 6 month low for a loss of 2.2%. Thereafter, selling momentum stabilised and the index edged off the early lows.
Sector performances featured an aggressive retreat for Information Technology, with the sub-index down more than 4%, mirroring the falls for the Nasdaq overnight. Leading names in the space attracted energetic selling; Wistech Global (WTC) shares were 9% lower, Altium (ALU) & AfterPay Touch (APT) were 7% lower, Cloud accounting group Xero Limited (XRO) fell 5%. Property Trusts were noteworthy as the sector only fell modestly compared to the broader market retreat. The sell-off for the market saw above average participation, with 1.5 billion transactions measured up to lunch valued at $2.5 billion. At lunch 141 stocks were higher, compared to 1023 which were lower – 290 were unchanged
Gold stocks were conspicuous for their improvements compared to the broader market experience. St Barbara Limited (SBM) share were 4% or 17 cents higher at $3.68, Evolution Mining (EVN) gained 3.3% or 9 cents to $2.80, Newcrest Mining (NCM) was 1% or 20 cents firmer at $19.51.
Energy stocks fell after global oil prices dropped overnight. The move was at odds with recent concerns around supply shortages, although participants were unnerved by the plunge in global equity markets. Concerns of the day turned around debates on the likelihood of moderating growth in response to trade wars or higher interest rates, and the negative impact that could have on demand for oil. Closer at hand , energy traders continue to monitor the path of Hurricane Michael. US authorities estimate that approximately 40% of oil and nearly 30% of natural gas production capacity has been shut down in the Gulf of Mexico.
Fortescue Metals Group (FMG) emerged as one of the stocks to trade against the trend with a 1% or 3.5 cent gain after announcing it will establish an on-market share buyback. The Iron ore miner said the program will be large as $500 million and remain in place for up to 12 months, commencing after the FMG releases quarterly results on Oct. 25
RCR Tomlinson (RCR) announced that it and design partner Opus International had been awarded a contract to carry out project services on the Auckland City Rail Link Project. The engineering and infrastructure company said the NZ$3.4B project comprises a 3.45km twin-tunnel underground rail link up to 42 metres below the city centre transforming the downtown Britomart Transport Centre into a two-way through-station that better connects the Auckland rail network. RCR shares were 1 cent lower at 93 cents.
Published by Tom Piotrowski, Market Analyst, CommSec