The buzz around ASX being on a sell off trend!


It seems that the Wall Street’s lead of closing lower at the behest of the threats from Washington to curb Chinese investment in the US, was followed by the Australian equities as well, as seen on June 26, 2018. However, the S&P/ASX 200 moved from a big opening loss to close 0.2 percent lower or 12.8 points at 6197.6 points, and avoided the bigger loss made on Wall street as at June 25, 2018. The US also saw a decline in the Dow Jones Industrial Average by 1.3 percent to 24,252 points and the S&P 500 to 2,717 points down by 1.4 per cent. The Nasdaq tech-heavy index fell to 2.1 per cent to 7,532 points, as at June 25, 2018. However, as at June 26, 2018, the share markets were seen to have stabilized a bit with US share indices recovering (DJIA up 0.1% and S&P up 0.2%) with rebound in tech shares and rise in energy plays. On the other hand, FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) were on a sinusoidal trend and were seen to stabilize on June 26, 2018 after the initial hiccups. The recent downtrend was based on the trade war fears that developed on the additional goods tariffs on Chinese imports beginning July 2018.

The whole saga of events impacted Australian stocks and the tech growth darlings like Altium, WiseTech and Appen, were seen to be falling down on ASX on June 26, 2018 (all around 4% by mid-day trading). In fact, the winds took a reversal as WiseTech, which had fallen about 3% in last five days, recovered by 3.79% a day later. Even Appen was seen to be moving up about 2.4% in initial trading post the sell-off.

Stocks like BHP Billiton and RIO Tinto under the materials and mining sector also slipped on ASX while a recovery was seen on June 27, 2018. However, Commonwealth Bank of Australia (CBA) shares rose against the trend on June 26 as they confirmed split of the wealth manger CFS Group. Australia and New Zealand Banking Group Limited (ANZ) and National Australia Bank Limited (NAB) stocks made modest gains making the banking stocks the market leaders, however, the rise was not seen to be continuing that well on June 27, 2018.

Given this to be the final week of the financial year, many sell-offs are being witnessed amid the threat on curbing of overseas investments in the US. Lately, the housing cycle has hit shares of CSR, the building materials group while banks were tightening their lending criteria in property markets and the foreign investments in housing markets have slowed down.

The Australian share market made modest gains from its lower open on June 26, 2018. Continuing from what was seen in a day’s framework and with some replacements in better performing stocks at the back of rally in oil and iron ore prices, ASX is still expected to trend lower on June 27, 2018 while weakness seems to be pouring in from different sectors though mining sector has been on the rise.

All in all, trade jitters and other domestic level issues that have been hovering around ASX seem to be slightly dodged by the energy sector movements, as at June 27, 2018; however, the stocks still would see some impact from macro standpoint before settling into the new financial year.


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