ASX slumps to worst week in four months as sharp sell-off in materials, utilities drags market into the red

A sharp sell-off in materials and utilities dragged the Aussie sharemarket into the red – marking its worst week in four months.

Gains in energy and the big banks were unable to offset losses as the Australian sharemarket closed out the week in the red, amid falling hopes of a Chinese stimulus package.

The S & P/ASX 200 index closed down 0.4 per cent at 8299 after hitting a three-week low of 8263.5.

The Index fell 2.6 per cent from a record intraday high of 8514.5 last week, losing 1.5 per cent for the week – its worst week in four months.

The broader All Ordinaries fell by 36.60 points or 0.43 per cent to close the week at 8550.30 points.

Iron ore futures are taking a hit as China’s expected economic policies fail to impress investors. On the Singapore futures markets, the commodity experienced a 2.32 per cent drop to $103.6 per tonne.

The result was the major miners selling off.

The major miners traded down on fears of a weaker iron ore price. NewsWire / Jeremy Piper

BHP was the least worst of the major miners, falling 1.48 per cent, while Rio Tinto and Fortescue metals slumped 2.76 and 3.66 per cent respectively.

AMP chief economist Shane Oliver said the dip in steel-related commodities reflects market scepticism about China’s economic strategies.

“We’ve seen quite a lot of monetary stimulus but in terms of fiscal stimulus there hasn’t been much announced. The market is losing patience, as the Chinese authorities keep saying they are going to stimulate the economy through fiscal policy but so far have not,” Dr Oliver said.

“Consequently, you go through days like today when the market gets hit as investors lose a bit of faith in the miners.”

The fall in iron ore also impacted the Australian dollar, which fell to 63.61 US cents.

“The dollar has been stuck in a range of 62 to around 70 US cents on the high side. Now we are going back to the low side, partly on concerns about the iron ore price and markets factoring in the implications of tariffs imposed by the US on China,” Dr Oliver said.

President-elect Donald Trump said he would impose a 60-100 per cent levy on Chinese imports during his election campaign.

The Aussie market recorded its worst week since May. NewsWire / Jeremy Piper

Mr Trump has subsequently said he would impose a 25 per cent tariff on products from Mexico and Canada, and 10 per cent tariffs on all other goods coming into the United States.

Rebounding from its 22 per cent fall yesterday was Ventia Service – up 11 per cent after Macquarie said the sell-off was overdone.

This was the best performing stock on the ASX 200.

Ventia shares have been volatile since the ACCC started civil proceedings in the Federal Court against Ventia and two of its employees for alleged price fixing relating to estate maintenance and operation services for the Department of Defence.

Insignia Financial rose 6.2 per cent to $3.61 after hitting $3.725 after the company confirmed a $4.00 share indicative non-binding takeover offer from Bain Capital.

Tab Corp and Paladin Energy were also among the strongest performing shares on Friday, finishing up 4.74 and 4.36 per cent respectively.