WORRY LEADS TO ASX SLUMP
Deutsche cuts outlook
WORLD market worries led to a slump in the Australian sharemarket yesterday, ending its worst month since the global financial crisis.
As investors fretted over the possibility the US Federal Reserve could soon raise interest rates, the benchmark ASX 200 yesterday slipped 56.6 points, or 1.07 per cent, to 5207.
The ASX 200 finished down 8.6 per cent for the month, its worst monthly performance since September, 2008.
Federal Reserve vice-chairman Stanley Fischer said over the weekend that the US central bank would not wait for inflation to hit 2 per cent before tightening policy.
OptionsXpress market analyst Ben Le Brun said a US rates rise would be the first in eight years and investors were uncertain how it could affect the US economy.
IG chief market strategist Chris Weston said the volatility in the China market also remained “the heart of concern” for investors.
The financial sector was the main drag on the bourse yesterday, with a soft performance from the big four banks.
Financial stocks ended the session down 1.31 per cent. Commonwealth Bank lost 1.68 per cent to $75.08, ANZ shares sank 2.1 per cent to $27.93.
National Australia Bank was off 1.3 per cent to $31.17, while Westpac retreated 1.52 per cent to $31.10.
The consumer staples sector was deep in the red, off 2.48 per cent, with Woolworths posting a large drop after UBS warned of a price war risk. Woolworths plunged 3.65 per cent to $26.40, Wesfarmers fell 1.91 per cent to $40.66.
Deutsche Bank yesterday slashed its outlook for the Australian sharemarket after last Monday’s 4 per cent dive, forecasting the bourse would stay below 6000 points well into next year. Deutsche Bank said it would cut its yearend target for the ASX200 index to 5600 points, revised from its 6200 forecast.
The bank’s medium-term outlook also soured. It predicted the benchmark index to hit 6000 points by the end of 2016.