‘Butterfly effect’ leads the Australian sharemarket lower
Australia’s sharemarket gave up ground to start the month of December as surprising news from the Japanese central bank and an outage sparked investors anxieties.
Investors’ confidence fell on Monday after the combination of an outage on the ASX and fears the Japanese central bank could lift interest rates led to a local market sell-off.
The benchmark ASX 200 fell 48.90 points or 0.57 per cent to 8,565.20 to start the month of December, while the broader All Ordinaries dropped 52.30 points or 0.59 per cent to 8,866.40.
The Australian dollar temporarily hit an eight-week high on Friday before slipping slightly on Monday to 65.48US cents.
On an overall weak day of trading, eight of the 11 sectors fell, led by healthcare, consumer staples and the major banks.
Health giant CSL dropped 1.43 per cent to $183.64, while Chemist Warehouse parent company Sigma Healthcare fell 1.39 per cent to $2.84 and ResMed slumped 4.60 per cent to $37.50.
All four major banks ended in the red as the financial sector fell 0.94 per cent.
CBA shares slipped 0.57 per cent to $151.64, Westpac dropped 0.88 per cent to $37.26, NAB gave up 0.62 per cent to $39.85 and ANZ underperformed down 1.27 per cent to $34.20.
IG market analyst Tony Sycamore said a couple of key issues weighed on investors confidence.
“It has been a bit of the butterfly effect today but it all started with an ASX outage and it was magnified by the Japan central bank governor Kazuo Ueda who put a rate hike firmly on the radar of markets,” he said.
At lunchtime in Australia, Mr Ueda gave his strongest signal yet the bank would lift interest rates following its December 8-9 meeting.
“We will examine and discuss economic and price developments at home and abroad, as well as market moves … and consider the pros and cons of raising interest rates,” Mr Ueda said.
Mr Sycamore said talks of an interest rate rise in Japan sparked fears the market could follow what happened in August 2024, when global markets dropped on just the talk of rising interest rates.
Also weighing on investors confidence was an outage on the ASX which impacted about 80 businesses trying to make company announcements.
Offsetting a weak day of trading were gains out of materials and energy shares.
A 1 per cent increase in iron ore helped lift the major miners, with BHP up 0.98 per cent to $42.08, Rio Tinto added 0.36 per cent to $132.76 and Fortescue traded 0.79 per cent higher to $21.58.
The price of oil also rose throughout the days trading with energy stocks up 0.51 per cent.
In company news luxury wine maker Treasury Wine Estates dropped 0.69 per cent to $5.78 after warning investors it would write down the value of its American operation by $687.4m due to a forecasted 11 per cent slump in yearly future cash flows.
Medical imaging giant Pro Medicus also fell 1.64 per cent to $262.18 despite an announcement to the market about a fresh $25m, seven-year deal with US health network BayCare.
Shares in AUB Group were smashed 17.77 per cent to $30.63 after announcing a potential takeover from EQT AB and CVC Asia Pacific has been terminated. The consortium was going to buy the securities at $45 a share.
Metcash shares also slumped 9.19 per cent to $3.36 following the release of the businesses half year results which showed profits under tax came in at $142.2m.
Casino operator Star Entertainment shares rose 4.76 per cent to $0.11 with the announcement that Soo Kim and George Papanier join the board as Bally’s nominees, after the US giant took over the business earlier this year.
