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At lunch on Friday, the Australian sharemarket is experiencing its biggest tumble since 11 June, with the ASX 200 down by 2.53 per cent to 5,957.9. This follows the worst day in almost three months in the US, with the S&P 500 down 3.5 per cent last night due to heavy declines across major technology companies.

The Nasdaq fell by 5 per cent overnight, due to tech stocks which have led the market to record highs in recent months. While it is difficult to pin the losses to just one catalyst overnight, questions are perhaps being asked about the extent of the tech gains recently. Amazon is up 82 per cent in 2020, Apple is up 65 per cent, Microsoft and Facebook are up 40 per cent and Alphabet is up 23 per cent. Combined, these companies are approximately five times the size of the Australian sharemarket. Despite last night’s tumble, the S&P 500 has only fallen to a 1.5 week low and has improved for 11 of the past 14 sessions.

What it means for the Australian market however, is a continued rocky start to the new month and season. Tuesday was the worst day in five weeks, Wednesday was the best session in five weeks and the market is having its biggest move of the week today.

Locally, all sectors are losing ground with most down by more than 2 per cent. Technology stocks are by far the worst, following US peers lower. Companies like Redbubble (RBL) and Xero (XRO) are down by as much ~6 per cent while Wisetech (WTC), which is also trading ex-dividend today is down close to 7 per cent.

Iron ore miners are struggling despite the commodity hitting a January 2014 high overnight. The iron ore price has improved partly on strong demand from China’s steel mills thanks to positive margins, which has encouraged a lift in production. The Chinese government has also been encouraging infrastructure projects while some producers could be bringing forward some of their production ahead of China’s winter, when Governments impose restrictions to control pollution.

Winners are few and far between. Just 9 of the 200 stocks on the ASX 200 are lifting. Four of them are gold miners (Silver Lake, Gold Road, Regis and Newcrest). New Zealand based casino operator, Skycity (SKC) is higher after posting a profit yesterday despite the impact of the pandemic on its business.

3.4bn shares have changed hands so far today, worth $3.5bn. 211 stocks are up, 1,019 are down and 290 are unchanged.

Published by CommSec