stock market
THE Australian market has followed Wall Street lower in early trade amid a broadbased sell-off stoked by investor concerns around inflated valuations.
Wall Street closed at its lowest level since last October on Friday, pulled down by falls in large-cap technology names like Alphabet, Facebook, LinkedIn and Netflix.
It came after LinkedIn shares plummeted following a sharp reduction in the group’s earnings outlook.
The local market followed suit today, with the big banks, mining stocks and consumer shares notching up steep declines.
At the open, the benchmark ASX 200 index was down 36.7 points, or 0.7 per cent, at 4939.5, while the broader All Ordinaries index lost 36 points, or 0.7 per cent, to 4989.6.
Friday’s Wall Street action suggested some hedge funds may have been taking a harder look at valuations, analysts said.
“There’s a lot of portfolio de-risking going on and high valuation securities are often the first to be sold. It’s also the securities that have done extremely well,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
“It’s a valuation call and it shows concern for the overall market.”
Meanwhile, worse than expected jobs numbers out of the US did little to calm investors over the dire action on equity markets.
Headline job creation numbers were poor with only 151,000 jobs added in December, compared with broad consensus for 190,000, and the US dollar fell immediately.
The Australian dollar was also lower, slipping under US71c by midmorning today.
Elsewhere, US Nymex crude dived 2.6 per cent to $US30.89 a barrel while global benchmark Brent crude slipped 1.2 per cent to $US34.06.
Iron ore was a bright spot, holding steady at $US44.70, while the gold price hit a three-month high of $US1157.70 an ounce as investors fled to safe havens amid the stock market ructions.
National Australia Bank shares retreated 0.7 per cent in early trade to $26.27 and the Commonwealth Bank also fell 0.7 per cent to $76.09.
Westpac was down 1.2 per cent to $29.99. ANZ had the heaviest fall among the major banks, shedding 2 per cent to $23.62.
That came amid reports regulators were planning to launch legal action against the bank following a probe into allegations of rate-rigging between banks.
The consumer stocks were hit hard, led by the major grocers. Woolworths dipped 1.7 per cent to $23.36 while Wesfarmers fell 0.4 per cent to $42.78.
JB Hi-Fi climbed 0.3 per cent as its first-half profit result revealed few surprises, while Ansell shares rose 1 per cent to $15.19 after it said it was confident in its future after formally unveiling its foreshadowed 21 per cent slide in first-half earnings.
Among the miners, BHP Billiton was down 1.6 per cent to $15.94 while Rio Tinto was down 0.3 per cent to $41.49.
Elsewhere, Telstra gave up 0.3 per cent to $5.635 while Qantas edged 0.3 per cent higher at $3.84.
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