weak chinese manufacturing data takes a toll on australian stocks 2060852015
Banks and energy stocks led losses on the ASX
Australian stocks ended sharply lower on the first day of the new month, reacting to disappointing data on Chinese manufacturing, in line with a bearish trend across global exchanges, as well as the overnight losses on Wall Street.
Indices and sectors
The benchmark S&P/ASX 200 fell 110.6 points, or 2.2 per cent, and closed at 5,096.4, while the broader All Ordinaries index was down 105 points, or 2.1 per cent, at 5,117.1.
The biggest losing sectors included financials (-2.51 per cent), information technology (-2.46 per cent), energy (-2.36 per cent), utilities (-2.28 per cent), consumer staples (-2.27 per cent) and telecommunication (-2.05 per cent).
There were no gaining sectors for the second consecutive day.
Stocks
The big banks posted losses between 2-3 per cent. Commonwealth Bank of Australia (ASX:CBA) fell 2.37 per cent to AU$73.30, National Australia Bank Ltd. (ASX:NAB) dipped 2.47 per cent to AU$30.40, Westpac Banking Corp (ASX:WBC) fell 2.89 per cent to AU$30.20 and Australia and New Zealand Banking Group (ASX:ANZ) was down over 3 per cent to AU$27.07.
In energy, Santos Ltd (ASX:STO) plunged the most, down 6.63 per cent to AU$4.79, while Beach Energy Ltd (ASX:BPT) slumped 5.22 per cent to AU$0.64. Woodside Petroleum Limited (ASX:WPL) dipped nearly 2 per cent to AU$31.62, Oil Search Limited (ASX:OSH) fell 0.88 per cent to AU$6.74 and Origin Energy Ltd (ASX:ORG) declined 0.97 per cent to AU$8.18. Senex Energy Ltd (ASX:SXY) lost 10 per cent to close at AU$0.015, and was the second biggest loser on the S&P/ASX 200.
Fortescue Metals Group Limited (ASX:FMG) was the loss leader amongst miners, down 6.02 per cent to AU$1.80, while BC Iron Limited (ASX:BCI) cut 4.17 per cent to AU$0.23. BHP Billiton Limited (ASX:BHP) fell 2.10 per cent to AU$24.65, Rio Tinto Limited (ASX:RIO) declined 1.83 per cent to AU$49.37 and Atlas Iron Limited (ASX:AGO) was unchanged at AU$0.03. Gold miner EVOLUTION FPO (ASX:EVN) bucked the bearish trend in mining and ended 4.41 per cent higher at AU$0.045. It was the second-biggest gainer on the S&P/ASX 200.
Woolworths Limited (ASX:WOW) continued its downtrend, falling 3.14 per cent to AU$25.57. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was down 1.62 per cent to AU$40.00, Caltex Australia Limited (ASX:CTX) fell 1.88 per cent to AU$31.28 and Metcash Limited (ASX:MTS) plunged 3.23 per cent to AU$1.05.. Pacific Brands Limited (ASX:PBG) was the top gainer on the S&P/ASX 200, rising over 10 per cent to AU$0.06. Myer Holdings Ltd (ASX:MYR) was flat at AU$1.21, though it reported that net profit plunged 70 per cent to AU$30 million.
Telecom was also sold off but iiNet Limited (ASX:IIN) swam against the tide, rising nearly 8 per cent to AU$9.52. However, industry leader Telstra Corporation Ltd (ASX:TLS) fell nearly 2 per cent to AU$5.66.
Qantas Airways Limited (ASX:QAN) jumped 3.27 per cent to AU$3.47, and was the third biggest gainer on the S&P/ASX 200, though rival Virgin Australia Holdings Ltd (ASX:VAH) fell over 2 per cent to AU$0.46.
Economic news, currency and market outlook
China’s official Purchasing Managers Index fell to 49.7 from the previous month’s reading of 50, confirming the slowing trend in Chinese manufacturing highlighted by the disappointing reading from the private Caixin advance estimate of PMI last month which lead to a massive sell-off in shares in Chinese and global markets. According to ABC, which quoted ANZ's chief China economist Li-Gang Liu, third-quarter Chinese GDP would likely slow to 6.4 per cent, compared to the government’s target of 7 per cent.
The Reserve Bank of Australia, as generally expected, left interest rates unchanged at the record low of 2 per cent for the fourth successive month at its monetary policy meeting yesterday (September 1). Despite the turmoil in financial markets the RBA continued its wait-and-watch policy, looking for more conclusive data on the direction of the Australian economy before taking any further steps. "While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year," said Governor Glenn Stevens.
Australian building approvals rebounded from a slow month in June, jumping 4.2 per cent in July on the back of a 11.7 per cent surge in multi-unit approvals, reports the ABC.
Housing prices continued to move up, albeit at a lower clip. The CoreLogic RP Data survey said house prices across the country rose 0.3 per cent in August, somewhat muted considering July's solid 2.8 per cent gain. Sydney prices were again at the top of the table, rising 1.1 per cent in August and 17.6 per cent year on year, according to the ABC.
Australia’s current account deficit deteriorated sharply during the June quarter, ballooning 41 per cent to AU$19 billion, up from AU$13.5 billion in the previous quarter and much higher than what economists expected, said the ABC.
On Wall Street Tuesday, US stocks plunged 3 per cent following weak manufacturing data out of China as well as the global bearishness in stocks. The Dow Jones Industrial Average slumped 470 points, or 2.8 per cent, to 16,058, the S&P 500 declined 3 per cent to 1,914 and the Nasdaq Composite fell 2.9 per cent to 4,636.
The Australian dollar is trading sharply lower on the back of a downturn in commodity prices as a result of weak Chinese manufacturing data, according to the Business Spectator. At 07:25 am this morning (AEST) the Australian dollar was trading at 70.17 US cents, down from 71.08 US cents on Tuesday. According to Deutsche Bank Chief Economist Adam Boyton, the slowdown in China and the commodities market could potentially push the Australian dollar down below 60 US cents, reported Business Spectator.
The Australian stock market is likely to open sharply lower given that at 6.45 am (AEST) the September ASX SPI200 Index (AP) Future contract was down 67 points at 4,991.
