Ugly day for stocks as ASX 200 plunges 3.7 per cent; Nikkei 225 crashes 14 per cent

Bloodbath across the board as the local sharemarket plunges with the ASX 200  down 3.7 per cent to a two-month low of 7649.6 in its worst day since May 2020. Global investors dump shares after US falls. Tokyo plunges 14  per cent in its worst day since the 1987 crash. Woodside buying OCI Clean Ammonia for $US2.35bn.

The ASX 200 is set for another big sell-off after weak US jobs data. Picture: Jeremy Piper

That's all from the Trading Day blog for Monday, August 5th. The ASX 200 ends down 3.7 per cent at a two-month low of 7649.6 points in its worst day since May 2020 as weak US jobs data spark US recession fears. Woodside in US ammonia buy.

The Aussie dollar is trading around US64.09c

Updates

4:51 pm August 5, 2024

ASX 200 ends down 3.7pc; worst day since 2020

David Rogers

Investors wipe $102bn off Australia's share market as US recession fears spark risk aversion after weak US manufacturing and jobs data.

In its worst day since May 2020, the S&P/ASX 200 ends down 293.6 points or 3.7 per cent at a two-month low of 7659.6 points after hitting a low of 7635.5.

The tech, financials, property, energy, and consumer discretionary sectors lead broad falls with WiseTech down 8.8 per cent, CBA down 5.7 per cent, Goodman down 7.1 per cent, Santos down 5 per cent and Aristocrat down 4.8 per cent.

It comes amid massive falls in the region with Japan's Nikkei 225 down 14 per cent as the Japanese yen soars on an unwind of carry trades.

S&P 500 futures are down 2.7 per cent with Nasdaq 100 futures down 5 per cent.

ISM Services data and the US Senior Loan Officers Survey is due Monday.

4:42 pm August 5, 2024

Woodside to buy US ammonia company for $3.65bn

Colin Packham

Woodside has agreed to purchase US company, OCI Clean Ammonia and its lower carbon ammonia project in Texas for US$2.35bn ($3.65bn), as the Australian company continues its spate of acquisitions.

The deal is the second major US purchase in the last two weeks as it moves aggressively to tap into expected growth for energy as it weans from coal.

Woodside CEO Meg O’Neill said the acquisition supports Woodside’s strategy to thrive through the energy transition.

“This transaction positions Woodside in the growing lower carbon ammonia market.

The potential applications for lower carbon ammonia are in power generation, marine fuels and as an industrial feedstock, as it displaces higher-emitting fuels,” said Ms O’Neill.

3:43 pm August 5, 2024 Highlight

Tokyo stocks plummet 10pc in afternoon trade

Agency writers

Tokyo stocks fell more than 10 per cent in afternoon trade on Monday as they were battered by a resurgent yen and poor US jobs data that fuelled fears of a recession in the world’s number one economy.

The benchmark Nikkei 225 index plunged 10.01 percent or 3,595.30 points to 32,314.40, while the broader Topix index lost 10.49 percent or 266.27 points to 2,271.33.

The Bank of Japan last week raised interest rates for the second time in 17 years, with talk of another rate hike to come, while the US Federal Reserve hinted at a cut as soon as September.

The moves pushed the yen to its strongest level in months – a negative factor for Japanese exporters.

On Monday afternoon, the dollar weakened further to 143.41 yen, from 146.52 yen in New York on Friday.

“Investor sentiment was down as the US employment data for July came in lower than expected, raising fears that the US economy is slowing more than expected, leading to selling in a wide range of stocks,” IwaiCosmo Securities said.

“The market was also weighed down by the yen’s appreciation against the dollar and as expectations for exporters’ upbeat financial results receded,” the brokerage added.

Daiwa Securities said the losses in Tokyo reflected “deepening concerns over the uncertain US economy”.

On Wall Street on Friday, the Dow Jones Industrial Average finished down 1.5 percent as data showed the US jobs market cooled much more than expected in July.

-AFP

3:33 pm August 5, 2024

ASX 200 down 3.6pc as rout worsens

David Rogers

Australia's S&P/ASX 200 stock index dives 3.6 per cent to a six-week low of 7649.7 in late trading as the global rout in risk assets worsens.

S&P 500 futures dive 2 per cent with Nasdaq futures down 4 per cent.

Japan's Nikkei 225 plunges 10 per cent in a day as USD/JPY drops 2.3 per cent.

2:45 pm August 5, 2024

Lynas, MP Materials unable to reach deal

Bridget Carter

Lynas Rare Earths boss Amanda Lacaze says a merger with MP Materials would have been “an excellent tie-up” for both businesses, but the pair were unable to reach a commercial agreement.

Speaking to journalists at the Diggers and Dealers mining conference in Kalgoorlie on Monday, the seasoned chief executive said the two companies were the only two non-Chinese producers of rare earths globally.

“We remain convinced it would be an excellent tie-up of both our businesses,” she said.

When asked if talks had been held on and off over the medium term about a tie-up, she said “we come across each other very often, so we know each other well”.

It comes after Lynas confirmed in February that it had held mergers and acquisition discussions with Nevada-based MP Materials Corp about a potential transaction.

Both Lynas and MP are dominant players in the rare earths industry outside China, with about 20 per cent market share collectively.

2:34 pm August 5, 2024

ASX 200 extends fall to 3.2pc as US futures tank

David Rogers

Australian stocks continue to drop alongside US futures and regional markets amid US recession fears after weaker than expected manufacturing and jobs data.

The S&P/ASX 200 falls 3.2 per cent to a near six-week near low 7685.9 points.

S&P 500 futures are down 1.6 per cent and Nasdaq 100 futures fall 3 per cent. Regional markets have been slammed with the Japan's Nikkei 225 down 7.7 per cent, South Korea's KOSPI down 6.9 per cent and Taiwan's TAIEX down 7.4 per cent.

Tech, financials, property, energy and consumer discretionary are being hardest hit with WiseTech down 6.5 per cent, CBA down 4.3 per cent, Goodman down 6 per cent, Santos down 4.1 per cent and Aristocrat off 4.4 per cent amid de-risking.

1:43 pm August 5, 2024

US ISM Services PMI in focus amid recession fear

David Rogers

US recession fear is building after a surprisingly-weak ISM Manufacturing survey and non-farm payrolls data last week triggered a major shift in market sentiment.

Apart from during the Covid-19 pancemic, investors hadn't seen such a weak manufacturing employment gauge since the global financial crisis, and the unemployment rate rose enough to trigger a "Sahm rule" warning of recession.

Adding to the negativity were revelations over the weekend that Warren Buffett’s Berkshire Hathaway sold a net $US75.5bn in stocks in the three months through June, helping boost its hoard of cash and equivalents to a record $US276.94bn.

But Monday's release of US ISM Services PMI data and the Fed's Senior Loan Officer Opinion Survey have the potential to will either reinforce or dismiss the negativity.

But these were only one month of data and subject to revision.

"I can’t see a reason for a sudden US lurch into recession," says Betashares chief economist, David Bassanese. "As former RBA Governor Ian Macfarlane once observed, recessions usually arise from imbalances or shocks – and the US is not really suffering from either at present, with corporate and household balance sheets still in reasonable shape and inflation almost back to the Fed’s target level."

Bassanese says the US may insteady be seeing is an "easing back or ‘re-normalising’ in conditions after the post-COVID pressure cooker environment of extreme labour shortages and stimulus-driven demand."

"Of course, this negative dynamic could build momentum – inadvertently tipping the economy into at least a brief recession – a risk which the Fed is likely monitoring closely," he cautioned.

The market is almost fully pricing a 0.5 per cent rate cut at the September policy meeting – which is not out of the question if economic data continue to weaken.

1:20 pm August 5, 2024

Big Four all down by 3.5pc-plus

Joseph Carbone

The red Monday has left no sector unspared, with the Big Four banks all dropping on a day the financials sector is — so far — second-worst on, down 3.8 per cent and only behind tech stocks, which have sunk 4.4 per cent.

CBA is down 3.8 per cent to $127.49 per share, NAB is also 3.8 per cent lower to $35.12 per share. Westpac has dropped 4 per cent so far, to $27.84 per share and ANZ is 3.6 per cent down to $27.68 per share.

12:53 pm August 5, 2024 Highlight

Red Monday for ASX on US 'hard landing' worries

David Rogers

It has been a bleak day for stocks so far Monday, with as much as $82bn wiped off the value of the Australian market as weaker-than-expected US employment data fuel recession fears.

In the first hour of trading, the S&P/ASX 200 index tumbled a massive 235.70 points or 3 per cent to a five-week low of 7707.50 points on broadbased falls. The index was last down 2.8 per cent at 7724.50.

The intraday fall was the worst since a 3.6 per cent closing drop on June 14, 2022.

After hitting a record high of 8148.70 points last week after lower-than-expected inflation data erased fear of another rate hike in Australia, the ASX 200 has fallen as much as 5.1 per cent in the past two sessions as weak US employment data adds to US recession fears.

Short covering may lend support at some point this afternoon before Monday’s release of US ISM Services data (around midnight Australian time).

12:49 pm August 5, 2024

Adgemis settles with former business partner

David Ross

Sydney pub baron Jon Adgemis has agreed to pay out former business partner Peter Crinis for a stake in a hospitality business as the two prepared to face off in court.

The NSW Supreme Court has heard Mr Adgemis and Mr Crinis had struck a deal early Monday morning to settle the brewing legal dispute, which came after the former Crown boss lodged papers against Mr Adgemis in June.

The court heard Mr Adgemis agreed to pay Mr Crinis in two tranches over August and September, ahead of a new court hearing on September 6.

The terms of the settlement are secret, however, sources indicated Mr Crinis was set to receive a significant haircut on the $800,000 he was seeking.