ASX 200 shares fall 4.2% over the week
Australian stocks declined 4.2% this week, extending last week’s losses, as a gauge measuring market volatility hit a reading of above 30, signalling extreme uncertainty on the market’s short-term outlook.
The S&P/ASX 200 index shed 210.83 points over five days to 4,765.35, including a slump of 143.32 points, or 2.9%, on Tuesday alone.
“In many respects, it’s a continuation of the themes that we’ve seen in recent weeks – slowing growth, falling energy prices, whether or not the US Fed [Federal Reserve] has overplayed its hand in terms of raising interest rates too early. These have all been factors,” said CommSec market analyst, Tom Piotrowski.
“[The Fed] talked about the fact that the US economy is doing reasonably well but did highlight the risks associated with the volatility that we’re seeing in the market and also the impact of a slowing Chinese economy.”
The S&P/ASX 200 VIX index ended the week at 30.29, the first time this year it recorded a reading of more than 30.
The VIX index last breached the reading of 30 in early September last year, weeks after China shocked investors with a drastic devaluation of its currency that triggered a global shares sell-off.
Financial, energy stocks tumble
All 10 sectors of the ASX 200 were in the red this week, with the biggest drag coming from financial and energy companies.
The S&P/ASX 200 Financials Index sank 5.8% over five days, led by a 40% plunge in OFX shares.
OFX (ASX: OFX) said on Monday it had ended talks with The Western Union Company in relation to the latter’s buyout proposal announced last November.
Bank of Queensland (ASX: BOQ) lost 16.9%, while BT Investment Management (ASX: BTT) slipped 16.5%.
Meanwhile, the S&P/ASX 200 Energy Index tumbled 4.2%, after oil prices slid to a new 12-year low.
Liquefied Natural Gas (ASX: LNG) was the worst-performing energy stock, plunging 23.1%, followed by Karoon Gas (ASX: KAR), which shed 11%. AWE (ASX: AWE) slipped 10.2%.
WTI crude closed at US$26.21 per barrel on Thursday, the lowest level since May 2003, according to data compiled by Bloomberg.
The futures traded at US$27.41 a barrel at 5:30pm AEDT.
Shares in Rio Tinto (ASX: RIO) dropped 1.3% on Friday after the miner on Thursday reported a full-year loss and hinted on ending its so-called progressive dividend policy.
Commonwealth Bank of Australia (ASX: CBA) advanced 1.8% on Wednesday after its half-year cash profit rose 4% and the lender kept its interim dividend unchanged from the previous corresponding period.
Electronics retailer JB Hi-Fi (ASX: JBH) on Monday upgraded its annual sales outlook as it delivered a 7.5% growth in first-half net profit. The stock was, however, little changed over the week.
Shares in Cochlear (ASX: COH) surged 14.1% on Thursday after the bionic ear maker lifted its interim dividend and raised full-year profit guidance after achieving strong first-half earnings.
“When investors know that resources [stocks] are in trouble and it’s not going to get better for a long time, they need something else, so defensive stocks such as the healthcare group come into focus,” said Piotrowski, adding that biopharmaceutical company CSL (ASX: CSL) reports next week.