IT & resources pull ASX lower, crypto markets bearish

Highlights 

  • Australian shares closed 1.1% lower today as losses across the technology and resources sectors weighed on the market, while yesterday’s resource-positive run continued.
  • Concerns over the Evergrande property collapse, worries over global inflationary pressures, looming debt ceiling in the US are impacting global investing sentiments.
  • In the crypto market, bearish sentiments are hovering, and cryptocurrency prices continued to be in the red

Two of the world’s biggest economies seemed to have majorly impacted investor sentiment at the local share market today. While concerns over China’s economy embark fears, rising inflation and the threatening US debt ceiling saw the ASX in a tailspin as alarmed investors deserted equities.

Australian share market performance

Today, investors strapped themselves for a bumpy session as the ASX futures pointed down 1.2 per cent in the early trade and the market was expected to follow Wall Street lower once again. At mid-day, tech, IT, and mining stocks once again followed their Wall Street peers lower and only  a handful of stocks posted gains. Late in the afternoon, the market was still 1.1 per cent lower, led by the big four banks and CSL Limited (ASX:CSL).

Finally, the ASX200 closed lower, dropping 78.90 points or 1.08 per cent to 7,196.70 and setting a new 50-day low. The index has lost 1.37 per cent for the last five days but has gained 9.25 per cent over the last year to date.

                 

IT & resources pull ASX lower, crypto markets bearish

 

9 of 11 sectors traded lower. Utilities was the best performing sector, gaining 0.11 per cent and 2.43 per cent for the past five days.

Here’s an interesting news for all you investing enthusiasts actively following the ASX- The market capitalisation of the ASX All Technology Index has doubled since early last year, from AUD 100 billion to more than AUD 200 billion, including more than 30 tech unicorns, as revealed by Chief executive Dominic Stevens in the ASX annual meeting this morning.

Top gainers & losers on ASX    

Material companies outshined the gainers list today. The top performer on the ASX pack was St Barbara Limited (ASX:SBM) which jumped 6.8 per cent. Regis Resources Limited (ASX:RRL) bagged the second gainer position, up 6.3 per cent. Silver Lake Resources Limited (ASX:SLR) followed suit with its stock gaining 5.3 per cent today. Evolution Mining Limited (ASX:EVN) was up 4.4 per cent and Orica Limited (ASX:ORI) rose 2.9 per cent after it provided a snapshot of promising results expected next month in its FY21 results.

Investors eye global factors while investing in stocks

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On the flip side, Pinnacle Investment Management Group Limited (ASX:PNI) was the top decliner with its stock down over 8 per cent. It was followed by material companies Mineral Resources Limited (ASX:MIN) and Chalice Mining Limited (ASX:CHN), that traded down by 5.7 per cent and 5.3 per cent, respectively. Tyro Payments Limited (ASX:TYR) shares dropped 5.5 per cent, followed by Lynas Rare Earths Limited (ASX:LYC), that plummeted by nearly 5 per cent.

RELATED READ: From APA Group to Crown Resorts: Why these five stocks are on the move today

Asian & global market performance

Asian shares seemed to have lost ground today as investors fretted over economic uncertainties that increased the US benchmark bond yields and pushed the dollar to a over a 10-month high.  Higher yields and the strong dollar upset Asian equities as MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.43 per cent and South Korea tumbled 2.06 per cent. The Hong Kong benchmark dropped 1.2 per cent whereas the Chinese blue chips traded 1.1 per cent lower. Japan’s Nikkei shed 2.35 per cent as votes for a new leader heated up sentiments.  Cash-tied China Evergrande Group’s shares rose over 12 per cent after it said that it plans to sell a 9.99 billion yuan stake it owns in Shengjing Bank Co Ltd. Beyond Asia, all three major US stock indexes fell almost 2 per cent or more, with interest rate sensitive tech and tech-adjacent stocks worst hit by the surging yields. The S&P 500 noted its biggest one-day percentage drop since May.  

What’s impacting share markets?

Worldwide, investors seem worried over the Federal Reserve’s indication that it would wind down bond and mortgage purchases in the months to come. Besides, the nation might reveal hiking interest rates late next year. Not to forget, the USA’s debt ceiling is also a point of concern for investors. The debt ceiling refers to the point at which the country is unable to borrow any more money.

In a nutshell, concerns over the Evergrande property collapse in China, worries over global inflationary pressures, and the looming debt ceiling in the US and the associated debate over lifting it between Republicans and Democrats seem to be threating investing sentiment.

Another factor is oil demand from China and Europe that has sent the price of coal, gas and oil skyrocketing.

Inflation is heating up

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Crypto market performance

Cryptocurrency prices continued to be in the red today. Cryptocurrency investment products and funds posted inflows for a sixth consecutive week, as investors viewed recent regulatory challenges in the sector as buying opportunities.

The largest virtual currency, Bitcoin tanked nearly 1.65 per cent to USD 41,754, taking the market cap down to USD 787.08 billion. The largest altcoin, Ethereum, suffered a bigger setback as it declined more than 6 per cent. The global crypto market cap is USD 1.84 trillion, over 2 per cent lower over the last day. Although the markets are highly bearish, the decrease in the total traded volumes indicate that there is no panic selling yet.

RELATED READ: The Crypto Heist: Who is the Professor in the Crypto World?

Interestingly, the S&P Dow Jones Indices has launched new cryptocurrency indexes, mainstreaming digital currencies including Bitcoin and Ethereum by bringing them to the trading floors of Wall Street. The new indexes are S&P Bitcoin Index, S&P Ethereum Index and S&P Crypto Mega Cap Index that will measure the performance of digital assets tied to them. The list will expand to include additional coins later this year.

 

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