2nd worst day in 27 years, ASX falls ~7%

James Gerrish

Market Matters

A savage sell-off hit stocks today with the ASX recording its 2nd biggest sell-off in the last 27 years, only one session during the GFC was worse being the 10th October 2008. The ASX was whacked 455 points today with the market closing right on the lows, US Futures were down ~5% during our time zone while Oil traded ~25% lower in Asia after being hit 10% Friday night – yes that’s right, 35% down thanks to the Saudi’s and Russians. Banks were down between 6.47% (CBA) and 9.51% (BEN), large cap resources were down hard, BHP off -14.41% closing the day at $27.55 – a huge move. Margin pressure throughout today with forced sellers hitting very thin bids – I could feel the pit of my stomach today, totally underestimated the savage nature of this selling.

From the peak of 7197 just 12 trading days ago, the mkt closed today at 5760, a drop of 1437pts / ~20%.

Overall, the ASX 200 fell -455pts / -7.33% today to close at 5760 - Dow Futures are trading down -1220pts/-4.75%

ASX 200 Chart

ASX 200 Chart


NO WHERE TO HIDE: its hard the really offer much value after a day like this…. markets have clearly gone into panic mode, pure and simple. The Coronavirus was enough however the ructions between the Russians and Saudis has thrown another spanner in the works. The Saudi’s pledging to flood the global oil market with supply, in order to exert their will over oil prices, that has a flow on effect in the credit markets where a lot of energy companies struggle, and bond holders take a bath as a consequence, just look at NBI today which has exposure to US high yield credit markets, it fell 10% amid panic selling, other more defensive ASX securities did the same as investors looked to cash up in any way possible – a clear panic sell-off.

The obvious concern being Coronavirus will slow global growth and cause a recession, central banks have very little room to move in terms of policy response and credit markets could freeze as a consequence. Markets clearly have little faith in the ability for emergency support to stem the tide right here and so we see an aggressive move to the exits. The more the panic, the closer we are to intervention, however the bigger the intervention needs to be.

Looking at the longer term chart of the ASX 200 puts things into context, some sever pain felt today right across the board as the market has aggressively rejected to top of its channel and is now close to testing the lower extremity…more on this tomorrow morning.

ASX Chart – Long term


· Santos Cut to Underperform at Bernstein; PT A$5.90

· Woodside Cut to Market Perform at Bernstein; PT A$24.40

· Orora Raised to Overweight at Morgan Stanley; PT A$3.50

· Sonic Healthcare Cut to Sell at Morningstar

· AMP Raised to Buy at Morningstar

· Harvey Norman Raised to Hold at Morningstar

· Downer EDI Raised to Buy at Morningstar

· Alumina Raised to Hold at Morningstar

· Magellan Financial Raised to Hold at Morningstar

· Tabcorp Raised to Buy at Morningstar

· Aurizon Raised to Hold at Morningstar

· Breville Cut to Neutral at JPMorgan; PT A$20

· ARQ Group Ltd Raised to Hold at Bell Potter

Get regular market updates

Market Matters publishes daily market reports and sends SMS alerts when we transact on our portfolio. To get our latest market views and hear when we take new positions, trial Market Matters for 14 days at no cost by clicking the 'CONTACT' button bellow.

Any advice provided is of a general nature only.

1 topic

James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment