ASX Banks and Miners Under Pressure in Today's Trade

Summary

  • COVID-19 pandemic induced restrictions brought the world economic activity to a standstill, with many economies expected to witness their worst recessions.
  • Today, ASX had a fluctuating trading session, with miners and banks remaining under pressure during the session.
  • With US President Donald Trump and former vice-president Joe Biden’s first pre-election debate scheduled on 29 September, the market is expected to remain volatile this week.
  • Dramatically increasing number of COVID-19 cases in the European region could be another worrisome factor for investors. Amid the rising cases, many protested against the COVID-19 related restrictions in London.

Needless to say, the COVID-19 stricken year 2020 has been unprecedented. From the time when the first cases were detected, we have now crossed more than half a year of the fateful period and no one knows when this crisis will end. Many pharma companies on a global level are racing with one another to develop a COVID-19 vaccination/treatment. The whole world is waiting for the medical breakthrough and also for the herd immunity from the virus.

Also read: Lessons from Spanish Flu Pandemic that Hit a Century Ago- History Repeating Itself?

In the wake of the pandemic, governments all around the globe had no choice but to implement lockdowns that adversely impacted the world economy and stock markets. Moreover, the deteriorating ties between the US and China have only added to the woes of investors.

In that backdrop, let's discuss the Australian stock market's performance today.

ASX Struggled for the Direction Today

Usually, ASX follows the previous Wall Street trading session trends. However, today, on 28 September 2020, it was different, as on 25 September 2020, Nasdaq Composite was up by 2.26 per cent, Dow Industrials increased by 1.34 per cent, and S&P 500 surged by 1.60 per cent. Consequently, a positive day was expected for the Australian Stock market today. Yet, the market kept fluctuating ever since the trading session started today.

Good Read: ASX Banks Pushed ASX200 Higher Last Week

Today, the benchmark index S&P/ASX200 (ASX:XJO) settled at 5952.3, trading downward by 0.21 per cent from its previous close. Few sectors that ended in the red zone included:

The financial sector traded downward by 0.63 per cent to 4,584.8. Another industry that remained under pressure today was the metals and mining industry, which closed downward by 0.32 per cent to 4,621.1.

All the top four banks on the ASX closed the day in red. Australia and New Zealand Banking Group Limited (ASX: ANZ) closed at AUD 17.700, down by 1.283 per cent, Commonwealth Bank of Australia (ASX: CBA) traded downward by 0.968 per cent to AUD 65.490, National Australia Bank Limited (ASX:NAB) was down by 0.817 per cent to AUD 18.220, and Westpac Banking Corporation (ASX: WBC) fell by 1.138 per cent to AUD 17.380.

If we talk about the mining sector, major players like Rio Tinto Limited (ASX:RIO) traded downward by 1.480 per cent to AUD 96.550, BHP Group Limited (ASX: BHP) declined by 1.25 per cent to AUD 37.130, and Fortescue Metals Group Ltd (ASX:FMG) fell by 0.314 per cent to AUD 15.860.

The Stock Market Expected to Be Volatile This Week

On 29 September 2020, Donald John Trump, the United States President, and Joseph Robinette Biden Jr., former vice-president, are set for their first pre-election debate. Consequently, the week is expected to be volatile for stock markets.

Must Read: How is the US Election Race Faring? Does it impact your portfolio?

It seems that investors have already started to get the heat of the upcoming presidential election. Also, there is a budding sense that results of the election would not be out on 3 November 2020. Moreover, there are assumptions that the transition would not be a smooth one. There is a real fear of a disputed election, which is expected to directly and significantly hit the performance of stock markets.

Market focus would also be on the recently highlighted need for a new fiscal support package in the United States by Federal Reserve Chairman Jerome Powell.

To know more, also read: The US Fed Bats for Further Stimulus, Market Losing Hope?

The Pandemic Is Far From Nearing the End

Dramatically increasing number of COVID-19 cases in the European region is incredibly worrying. Ever since the onset of the pandemic, the virus has been equally hard on the developed and developing countries. Europe and the US experienced devastating impacts of the coronavirus. Apart from losing so many lives in the absence of effective treatment, the economies of these developed regions witnessed the worst crisis.

When the already struggling European economy was trying to recover from the initial impacts of the virus crisis, increasing number of cases is dousing the hopes of earlier recovery. The spike in coronavirus cases is leading to the fear of a repeat of the frightening views from last spring with overcrowded ICUs and high casualties in Italy and Spain.

Due to the prolonged virus crisis, people are getting impatient and many recently protested in London against the new restrictions issued due to rising coronavirus cases. Moreover, they were seen ignoring social distancing, with many without masks.

Bottom Line: So far in the year 2020, stock markets remained volatile due to the prolonged virus crisis. The upcoming US presidential election and increasing cases in Europe seem another set of concern for investors.

Also Read: ASX Leaders and Laggards from Last Week - SOL, WBC, NEC, OZL, NST, ALX

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