The ASX yesterday touched a two-and-a-half year low due to concerns over china’s economic stability and further falls in global oil prices which had heavy impact on energy and materials sectors.
At the markets official closing time of 4:15pm (AEDT) the benchmark ASX was down 58.6 points to 4932.2, 1.17%. The broader All Ordinaries index has fallen 58.7 points or 1.16% to 4990.7. At 11:20am AEDT the ASX reached a low of 4880.1 points, the the lowest point since July 2013.
Monday low confirmed a seven day loosing streak for the ASX, which it hasn’t had since June of 2010. In 2016 so the ASX has lost approximately 7% the equivalent of $100 billion in market value.
After a fall in commodity prices the resources and energy sectors were the hardest hit, Oil prices have slumped to a new 12-year trough with the benchmark Brent crude falling 0.6% to $US33.55 a barrel. Investors were also closely watching Chinese markets and the People’s Bank of China’s currency-setting decision. This caused the Chinese Shanghai Composite Index to drop 1.71% to 3131.85, this is following a fall of almost 10% last week.
Major in the resource and energy sectors BHP Billiton dropped 4.16 per cent to $15.67, while Rio Tinto fell 4.03 per cent to $40.21 over all energy stocks were down 2.87%.
Financial stocks also took a hit yesterday falling 1.5%, ANZ closed 1.29% lower at $25.21 while Commonwealth Bank fell 1.51% to $78.22, NAB dropped 1.48% to $27.31 and Westpac falling 1.61% to $30.50.
One of the biggest losers of the day however was price comparison website iSelect who fell 36.36% to just 70c per share. This comes from cuts in its underlying earnings guidance for the year from $26 million to $15-$18 million.
Last week’s market turmoil was largely driven by a major devaluation in the yuan, however the People’s Bank of China set the mid-point for the yuan at 6.5626 per US dollar, confusing analysts who had wanted something closer to 6.5860.
The perceived mistakes by Chinese authorities have heightened concerns that Beijing may be loosing its grip on economic policy even as China looks set to post its slowest growth in 25 years.
Chinese markets have had a horrendous start to 2016 caused by the falling yuan, two days of stock exchange suspensions, weakening factory and service sector activity and worries about looming share sales by major stakeholders once a ban on such sales expires.