Stocks see worst week since Trump’s election

The local market has now given back all gains booked since Donald Trump’s election.

Australian stocks have now lost everything they gained in the global equities rally that followed the election of US president Donald Trump, with the worst week in 13 pulling the local index within reach of the 5600 point level.

Major mining and bank stocks led the local market into negative territory in the afternoon after an initially positive start wore off, with miners hit by China’s decision to lift short-term interest rates.

It came as a week’s worth of Donald Trump headlines and half yearly earnings numbers also had investors feeling cautious.

At the close the benchmark S&P/ASX 200 had lost 0.4 per cent, or 23.8 points, to 5621.6, taking it below where it was when news broke that Donald Trump was taking the White House. Meanwhile the broader All Ordinaries index shed 23.9 points, or 0.42 per cent, at 5,672.5 points.

For the week, the benchmark was down 1.5 per cent.

Technical analysts are nervously watching the 5600 point level — only slightly below today’s close — as many expect a break below that level to trigger further selling.

“We continue to watch the 5600 level in the cash market, as a break here sees price print a lower low and suggests a fairly quick response down to 5525 points,” IG chief strategist Chris Weston said.

ThinkMarkets senior market analyst Matt Simpson said the main reason for the market to slip from positive territory during morning trade and into the red after lunch was China’s central bank’s announcement that it was lifting its short-term interest rates, effective on Friday.

“China is tightening, which they were not expected to do on Friday,” Mr Simpson said. Meanwhile, the stronger Australian dollar also weighed on the sector.

The materials sector finished Friday down 2.2 per cent, with BHP Billiton falling 3.1 per cent to $26.20 and Rio Tinto giving up 3.96 per cent to $64.53. Fortescue Metals was the second-worst performing stock on the ASX 200 with a 4.6 per cent fall to $6.45.

Big banks also helped suck the life out of the market, with Commonwealth Bank and Westpac both dropping 0.4 per cent, to $81.68 per cent and $31.89 respectively. NAB finished flat at $30.39 and ANZ slid 0.95 per cent to $29.11.

On a positive note, Telstra rose 1 per cent to $5.08, while CSL gained 0.2 per cent to $112.37.

Woolworths grew 0.4 per cent to $25.39 after UBS raised its recommendation on the stock to buy from sell.

Meanwhile, the Australian dollar continues to stand tall against other key currencies after hitting a fresh three-month high overnight, buying US76.49 cents at 4.20pm (AEDT).

“The constellations have aligned for the Aussie dollar,” Mr Spooner said. “Stubbornly strong commodity prices combined with gradually improving export volumes are combining to force upward revisions in the outlook for both the Australian economy and its currency.

“At the same time, moderating expectations for a major improvement in US growth are delivering a downward correction in the US dollar.”