The ASX was down 48.1pts, or 0.80 per cent, at 5725.3pts on Wednesday. A surge in the US dollar caused a selloff in US markets on Tuesday, which reverberated on the ASX the following day.
Capital good orders and new home sales data came in better than expected. “The selloff in the U.S. has hit our market and was triggered by better than expected U.S. data. Investors appear uncertain whether strong U.S. data is actually a good thing for the global economy,” said Wise-owl equity analyst Simon Herrmann.
The Metals and Mining and Resource sectors led the selloff, falling 1.35 and 1.29 per cent respectively. All indices were down, with the exception of the Information Technology index, which rose 0.55 per cent. Investors retreated from the commodity sectors on the back of USD gains.
Australian shares fell in the opening hour of trading on Wednesday. It later met resistance and recovered partially, before falling sharply again around 11:30am. A minor rally in the early afternoon died out and ultimately the ASX closed near daily lows. The Australian dollar has been following a downward trend after peaking above the US$0.80 mark a week and a half ago. The AUD is trading slightly up at US$0.7766 at 4:50pm AEDT.
The selloff in the US brought the Dow Jones down 1.04 per cent and the S&P 500 down 1.03 per cent. European markets eyed the US data as well, with the DAX falling 1.61 per cent and the FTSE 100 falling 1.18 per cent. Asian markets have had a mixed reaction to the US selloff. The Nikkei 225 continues to show strength, rising 0.17 per cent near the end of trading on Wednesday. While the Hang Seng is down 0.79 per cent, the Shanghai Composite continues its rapid growth, rising 0.63 per cent so far on Wednesday.
Programmed Maintenance Services (ASX:PRG) was up 9c, or 3.53 per cent, at $2.64 per share. Full-year profits for the company fell 4.1 per cent. The company is still in talks with its rival Skilled for a potential merger deal.
Suncorp Group (ASX:SUN) was up 2c, or 0.15 per cent, at $13.42 per share. Suncorp announced a new technology program to simplify its business structure and to cut costs across the board on Wednesday.
OzForex Group (ASX:OFX) was down 13c, or 5.46 per cent, at $2.25 per share. Shares of OzForex continued to fall significantly despite the company posting strong gains in profits, revenue and dividends.
BHP Billiton (ASX:BHP) was down 48c, or 1.61 per cent, at $29.34 per share. Bond investors retreated from the mining giant over concerns of under diversification in the company’s operational strategy.
Author: Matthew Dibb
May 27, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.