Name: Stocks, Australian dollar plunge as investors take 'reality check' - ABC News
Brand: abc.net.au
SKU: abc-net-au-64
Availability: OnlineOnly

critic

Stocks, Australian dollar plunge as investors take 'reality check' - ABC News

preview

Stocks, Australian dollar plunge as investors take 'reality check'ShareThe Australian share market has closed in the red for a second day, but off the lows of the session as US stock market futures moved higher.The ASX 200 lost 1.9 per cent to finish at 5,847 points, after clawing back some of its early falls of more than 3 per cent.The Australian dollar was savagely sold off overnight but regained some ground to around 68.6 US cents by 4:45pm AEST.The losses follow a period of optimism on markets, with the ASX 200 up by around 28 per cent from its low in late March, with even bigger gains on US indices."Investors were looking through the very clear evidence we've seen of economic damage … there was a lot of optimism and a lot of hope, frankly, that we'd see a 'V-shaped' recovery in economies as they came out of lockdown and that there'd be a cure or a vaccine for the virus," CMC Markets chief strategist Michael McCarthy said."That strength that we'd seen and that optimism is being moderated, and it's quite possible from the falls that we're seeing over the past 48 hours that we could see further damage over the coming days and weeks."Energy stocks were hit hard after oil prices tumbled, including Worley (-5.8pc), Beach Energy (-4.3pc), Woodside (-5.3pc) and Oil Search (-5.7pc).There were again heavy losses for banking stocks including ANZ (-2.8pc), the Commonwealth Bank (-1.6pc), NAB (-2.5pc) and Westpac (-3.3pc), as well as smaller banks Bendigo and Adelaide (-3.7pc) and Bank of Queensland (-2.6pc)."A very steady interest rate environment means [banks] are likely to see margin pressure and, because they're also leveraged to the economy, they're part of every industry in that they have business with them, that leverage means that if the economic outlook is deteriorating, so is the outlook for the banks," Mr McCarthy added.Westpac could face further allegations of anti-money-laundering breaches, as the regulator AUSTRAC broadens its investigation.The bank said it had continued to review its processes and, as a result, reported additional suspicious transactions related to potential child exploitation to AUSTRAC.It said AUSTRAC had requested further information regarding 272 customers and transaction reporting issues.Westpac, which has , filed its defence earlier this month, admitting to most of the allegations.AUSTRAC has alleged Westpac breached anti-money-laundering and counter-terrorism financing laws more than 23 million times by failing to report transactions, and failing to adequately monitor accounts and identify when money was being used to pay for child exploitation. "A revised statement of claim, including the threshold reporting breaches and the alleged child exploitation failures, is now a certainty," Thomson Reuters' financial crime expert Nathan Lynch said."It's just a terrible development and it's a reminder that when you don't know what's happening in your bank, anything could be happening in your bank."The falls on the local market follow the worst one-day percentage plunge for US stocks since mid-March, as fears of a second wave of coronavirus infections returned and investors were spooked by gloomy economic forecasts from the Federal Reserve.All three major indexes plunged more than 5 per cent, the biggest one-day falls since March 16, when business lockdowns to control the spread of the coronavirus in the US were put in place.The Dow Jones Industrial Average fell 1,862 points, or 6.9 per cent, to 25,128, the S&amp;P 500 lost 5.9 per cent to 3,002 and the Nasdaq Composite dropped 5.3 per cent to 9,493.Among the major S&amp;P 500 sectors, energy and financials suffered the largest percentage drops, plunging by 9.5 per cent and 8.2 per cent.Travel companies were among those hit hardest on Wall Street, with Norwegian Cruise Line Holdings dropping 16.5 per cent and Royal Caribbean Cruises losing more than 14 per cent.Boeing was the biggest loser on the Dow Jones index and slid by 16.4 per cent after its top supplier Spirit AeroSystems Holdings announced a three-week layoff for staff doing production and support work for Boeing's 737 aircraft.The sell-off came after the market had staged a big rally in the wake of its March lows.NAB's head of foreign exchange strategy Ray Attrill said the sell-off was based on a "reality check" as US COVID-19 infection rates started rising again and the Fed gave a gloomy economic outlook."To this mix we should also add the scale of the recent equity market run-up, which by all accounts has been driven in large part by high participation from retail investors and which took some technical indicators, such as relative strength indices, off the charts," he wrote in a note.Analysts in the US said there were few buyers in the market last night."There's really no buy point," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago."It's pretty much selling all the way through."Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, agreed."Everything's for sale," he added."There's fear we're near a top."European markets were also a sea of red. London's FTSE 100 index dropped 4 per cent to 6,077, Germany's DAX lost 4.5 per cent, and the French CAC 40 slumped 4.7 per cent.Spot gold fell slightly to $US1,727.15 US an ounce.Oil prices tumbled, with Brent crude oil down 8.5 per cent to $US38.20 a barrel.In economic news, the number of Americans seeking jobless benefits fell last week, but millions laid off because of COVID-19 continue to receive unemployment benefits.The weekly jobless claims report from the Labor Department came after a surprise fall in the US unemployment rate in May.ABC/wires11 Jun 202011 Jun 2020Thu 11 Jun 2020 at 10:10pm, 12 Jun 202012 Jun 2020Fri 12 Jun 2020 at 7:16amMore on:

Stocks, Australian dollar plunge as investors take 'reality check'ShareThe Australian share market has closed in the red for a second day, but off the lows of the session as US stock market futures moved higher.The ASX 200 lost 1.9 per cent to finish at 5,847 points, after clawing back some of its early falls of more than 3 per cent.The Australian dollar was savagely sold off overnight but regained some ground to around 68.6 US cents by 4:45pm AEST.The losses follow a period of optimism on markets, with the ASX 200 up by around 28 per cent from its low in late March, with even bigger gains...

public

Sue Lannin

Stephanie Chalmers

Official account of the Australian Broadcasting Corporation, connecting you to the best content. Follows ABC accounts, lists trusted profiles.

Stocks, Australian dollar plunge as investors take 'reality check' - ABC News

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS