Source : the age
Australian shares have fallen for a second week amid high oil prices, US bond market concerns and a sell-off in local banks as housing market gloom persists.
The S&P/ASX200 fell 24.9 points on Friday, down 0.27 per cent, to 9,058.9, as the broader All Ordinaries lost 28.8 points, or 0.31 per cent, to 9269.7.
The top 200 has dropped almost 2.5 per cent since resetting record highs earlier in August after housing market concerns sparked a banking sell-off that has loomed large over earnings season.
Energy and gold stocks offered some support as oil prices climbed and historically high US debt and Treasury yields rattled investors, prompting the US government to intervene in its roughly $US60 trillion ($A84 trillion) bond market.
The move was concerning and echoed interventions that preceded 1992’s Black Wednesday pound crisis and 2015’s Swiss Franc shock, Moomoo market strategist Michael McCarthy said.
“It appears that we regularly need to repeat the lesson that nobody is bigger than the market,” he said.
“In both of those cases, the governors of the Bank of England and the Swiss National Bank tried to hold back the tide, and eventually they got washed away by it.
“What happened this week has increased the likelihood that the next financial crisis will originate in the US bond market.”
Caution was the order of the day, with investors taking profits on a recent rally in healthcare stocks, while consumer spending housing market concerns continued to weigh on discretionary retail (down 1.8 per cent) and property stocks (down 2.4 per cent).
The heavyweight financials sector inched 0.2 per cent higher but has dived more than eight per cent in two weeks after major banks reported home loan applications have plummeted since May’s federal budget.
Resources advanced have gained 5.5 per cent since Monday, while gold stocks surged for a third straight week, further bolstered by US debt concerns that downgraded the greenback’s safe-haven status.
The energy sector has advanced for seven of the past eight weeks, tracking with a resurgent oil price after the US threatened to broaden sanctions on Iran and its trading partners.
Local earnings season is in full swing, helping TPG Telecom, Guzman y Gomez, and Regis Resources shares rise on the backs of solid results.
On the flip side, Charter Hall, Perpetual, GQG, ARN Media and Inghams tumbled after their financials failed to impress.
The Australian dollar is buying 71.46 US cents, up from 71.22 US cents on Thursday.
Cryptocurrency bitcoin has had its best week in almost a year, surging almost 20 per cent to $US75,400 ($A105,550) after US President Donald Trump called on Congress to pass a crypto regulation bill.
Overnight on Wall Street, the S&P 500 fell 0.9 per cent for its fourth loss in the five days since setting its record last week. The Dow Jones Industrial Average fell 1.3 per cent, and the Nasdaq composite sank 1 per cent.
The bond market remains the centre of the action after yields charged higher through the northern summer on worries about high inflation, gargantuan government debts and other factors. US Treasury Secretary Scott Bessent made a move that jolted financial markets to at least double the size of his department’s planned purchases of longer-term Treasurys from September 9 to November 4.
That helped to push yields down after the 10-year Treasury’s yield had hit its highest level in more than a year, and the 30-year yield got back to where it was in 2007, before the Great Recession sent yields towards zero worldwide. It’s a big deal because high yields slow the economy by raising interest payments for people, companies and the government, and they can undercut prices for shares and other investments.
But analysts had cautioned the effect may be short-lived, given how small the purchases are relative to the overall size of the Treasury market and how they don’t fix the fundamental concerns of investors that had driven up yields in the first place. Plus, more signals arrived quickly to push worries higher.
The US government’s debt topped $US40 trillion ($56.2 trillion) on Wednesday, a staggering record that arrived months after the national debt first blew past the $US39 trillion mark in April, because Washington continues to spend far more money than it brings in.
With AAP, AP, Bloomberg
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