- ASX following US Friday decline with a 0.3% fall after opening Monday
- Banks and miners hardest hit by Brexit fears and trade negotiations
- Central banks believed to be preparing to cut rates
The Australian stock market started Monday off with a dip after US markets turned down on Friday. The downturn came quick on the back of data from US Non-Farm Payrolls, showing that out of a forecasted 180,000 new jobs in February, only 20,000 actualized. The disappointing job growth hit the US itself hard, but the prominent position of America in global finance means that ripples will be felt globally, rolling West from Australia as markets open for the week.
Interest rates falling as central banks believed to prepare cuts
Although the downturn was inevitable on Friday and resulted in the worst performing week in stocks for the year globally, the total dip was less than many expected. Part of the reason for this seems to be strong expectations of central banks lowering rates in the near future, with some central bankers urging calm and promising ‘policy support’.
After an initially larger dip US markets recovered to only a 0.2% decline by closing Friday. Harder hit were US treasury yields, which tumbled to 2.62 percent for the ten year note and 2.46 percent for two year notes, with bets rising on the Fed announcing a cut before the end of the year.
Brexit, trade wars and financial malaise
Hardest hit over the last few weeks are large banks and mining companies. An expected fall in interest rates, combined with uncertainty over Brexit and US-China trading relations have created a malaise in trading in these sectors. Many of the biggest losers today in early trading on ASX fall under these categories, with both Eclipx (ECX) and CYBG plc (CYB) down around 2.5 percent. Likewise regulatory uncertainties and the prospect of tariffs lead to concerns for miners, even in Australia. The price of gold however is slightly up.
At the time of writing, the ASX is down 18 points for the day, or 0.3 percent. Japan had a softer start to the week, with the Nikkei 400 sitting at a 0.2 percent rise in the first hour of trading.