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Another tough session today sees the ASX200 trade to the lowest level since August 24, officially entering correction mode off 882pts/10.2% from the high set on the 14th of February.
We are making several changes to portfolios.
The ASX200 closed down 0.9% on Monday, posting a seven-month low in the process, though it managed to bounce ~1% from its intraday lunchtime low. The index had extended the past month’s pullback to 9.3% – just shy of an official correction (10%).
A tail of two sessions today with extreme weakness this morning pushing the ASX200 down ~150pts early before a spirited come back saw the market finish ~100pts up from its nadir – buy the dip was alive and well underpinned by a recovery in US Futures which were down 1.6% before trading higher by our close.
The ASX200 limped higher on Monday with little conviction as US S&P500 futures and Asian equities peeled away after some unconvincing comments from President Trump in an interview that aired Sunday US time.
SPI Futures were pricing a good bounce this morning up ~70pts, however, that didn’t materialise as investors seemed to focus on the growing prospect of a US recession amid ongoing trade frictions.
President Donald Trump campaigned on a promise to lift what he called an ailing US economy, although the data and stock market said otherwise. Last week, he suddenly warned his much-beloved share market that some pain might be on the menu before things improve.
Friday’s sharp 1.8% sell-off compounded what had already been a tough few weeks for local stocks. Last week saw the ASX200 accelerate lower, extending its decline from its mid-February high to 7.8%. Much of the damage was inflicted by the outperforming, high-value stocks that have driven markets over the last two years, such as banks, retailers and tech stocks.
A soft end to a tough week in markets with the ASX now off ~8% from the high set on Valentine’s Day (8615), closing sub 8000 at 7948, a 6-month low. Over 80% of the market fell, with very few places to hide. The selling was Aussie centric, obviously, weakness overnight played into it and being a Friday creates a void of buyers, but we were not being pressured further from weakness overseas during our session.
The ASX200 endured its third daily decline on Thursday, finishing 46 points lower. However, the heavyweight miner’s BHP, RIO, and South32 all traded ex-dividend, along with oil giant Woodside (WDS), exacerbating the weakness and illustrating why charts can only be used so far before we must bore down into the markets’ nuts and bolts.
