The Australian sharemarket greeted the Trump era by dropping to a one-month low, further consolidating a streak of losses that saw it fall below 2016 levels last week.
The benchmark S&P/ASX200 index closed down 0.8 per cent to 5611 points, bucking the trend set by most regional markets, which ended the day higher, with the exception of Japan’s Nikkei which dropped 1.1 per cent.
Atlantic Pacific Securities client adviser Gary Huxtable said the change in sentiment was due to the unjustified markets euphoria at the end of last year, particularly within the banking sector.
“Whilst some initial profit taking was to be expected, the fact our market has failed to find any level of support over the last couple of weeks would be starting to concern some investors,” he said.
Shares had actually been expected to rise at the start of trade following cautious gains on Wall Street in the wake of Donald Trump’s inauguration speech.
But a surprise earnings downgrade from logistics company Brambles set the tone at the start of trade, sending the shares to their lowest point in nearly 11 months to close down 15.8 per cent at $10.34. The sell-off pushed other industrials, as Monadelphous lost 3.5 per cent and Downer EDI fell 2.2 per cent.
Also falling heavily were healthcare stocks, led by CSL which fell 2.7 per cent as traders locked in profits after gains in previous sessions. The banks couldn’t hang onto early gains and lost between 0.1 p[er cent and 0.4 per cent.
Bucking the day’s trend was Bega Cheese, up 1.9 per cent, cementing its significant gains in the three days since it announced its purchase of the Vegemite brand. Gold miners were also mostly higher thanks to a rise in the precious metal’s price to $US1215 an ounce.
CMC Markets chief markets strategy Michael McCarthy said that while the weakening US dollar had pushed commodities prices higher, it was hurting a lot of internationally-exposed Australian businesses. “Throw in a few earnings downgrades, and it’s just an ugly day on the markets,” he said.
Despite this, Mr McCarthy said the day’s light volumes meant it would be largely shrugged off by investors, who “wouldn’t be reading too much into this year’s early action”.