A steep sell off for US markets overnight has seen local shares reverse yesterday’s positive momentum as global markets remain volatile to start the New Year. The action on Wall Street was led by a ~10% slide in Apple shares after the tech giant released weaker earnings forecasts for the recent holiday quarter with sales slowing in China particularly. The weak Apple update, along with US factory activity hitting two year lows, has further stoked concerns of slowing global economic growth.
The ASX 200 followed global markets lower on the open and has seen losses accelerate towards lunch, with the index falling 56 points or 1% to 5577.6. Approximately 80% of top 200 stocks are in negative territory with losses broadly across the market.
The majority of sectors are in the red with the traditionally defensive utilities the main exception with AGL Energy (AGL) climbing 1%. Gold miners are also a beneficiary of the flight to safety with the precious metal seen as a safe haven in uncertain times. Saracen Minerals (SAR) is lifting 6.3% and Newcrest Mining (NCM) is up 2.8%.
Leading the losses are healthcare names with CSL Ltd (CSL) easing 2.2%. Materials are also lower with BHP Group (BHP) down 1.8% and Rio Tinto (RIO) losing 1.9%. Growth stocks in the IT sector are experiencing some of the heaviest losses with logistics and accounting software firms WiseTech Global (WTC) and Xero Ltd (XRO) both falling around 4%. The big four banks are also down between 0.5-1%.
There has been some mixed local economic releases with the Commonwealth Bank Services PMI coming in above estimates at 52.7 points, pointing to an expansion for the services sector domestically. However, national vehicle sales in December fell 14.9% compared to the prior year. New car sales can be a key indicator of consumer consumption and confidence.
The Aussie dollar has recovered from the ‘flash crash’ yesterday where the currency briefly hit a 10 year low but still remains a touch below 70 US cents.
So far, 0.5b units have been traded worth $1.3b with 310 stocks higher, 509 weaker and 278 unchanged.
Published by CommSec