ASX 200 Suffers Risk Off Sentiment

• Global selloff causes havoc in Australia.
• Bonds continue to attract attention.
• Most sectors are down, but healthcare seems buoyed.

Monday has been an absolutely brutal session for most of the trading world, and the ASX 200 will have been no different. In fact, the market plunged all the way down to the AU$7500 level before bouncing. Quite frankly, we are now out of the realm of trying to differentiate economies, and into the new realm of trying to get rid of any risk at all.

Australian equities will continue to be at the mercy of global indices and global markets, so therefore what you saw on Monday was something to keep in mind. Quite frankly, if the Americans and the Europeans continue to sell everything they can, it’s very difficult to imagine that Australia would be any different.

At this point, the AU$7500 level will be crucial, because as far as the technical analysis is concerned, the next major support level is all the way down to the AU$7000 level. As traders panic and try to get rid of any sign of risk, it means that bonds should do fairly well, be it in Australia or more specifically, the United States. A break down below the AU$7500 level could be assigned that the contagion of the carry trade unwind, and recessionary fears continues to cause major issues around the world.

Commonwealth Bank of Australia

There was selling across the board during the trading session on Monday, but CBA got particularly hammered, losing 5.72% during the session to drop down to the AU$124.89 level. It is worth noting that CBA is up a little over 22% for the year, so while it was a horrific day for the stock, the reality is that we are still very much in an uptrend. It does make a certain amount of sense that banks would suffer though, because CBA of course will be invested in multiple countries.

Australia and New Zealand Group Holdings LTD

ANZ fared rather poorly as well, dropping 4.46% during the trading session, as you would have been very hard-pressed to find much in the way of winners in the ASX 200. At this point, ANZ also suffers the same problems that the CBA stock will, mainly that they may be underwater when it comes to some bonds. That being said, traders are in the mood to sell things first, and ask questions later and therefore I think financials continue to lag.

Resmed Inc

Resmed, the healthcare giant in Australia, gained 2.93% as traders look for some type of safety. This was a classic move into safer assets, and I do think that will continue to be what most traders look toward. That doesn’t mean that there will be a bounce when it comes to risk appetite in the short-term, but the reality is that the safety trade will continue to offer benefits. With a dividend of $0.20, it does make a certain amount of sense that the trading public may be looking to hide into corporations that are “needs”, and not necessarily “wants.” Adding a dividend of course only helps of the argument.

FMG

Fortesque dropped as well, losing 1.87% for the session. The materials sector across the board was handed losses, although it’s worth noting that a few of the competitors for Fortesque did fairly well, as Rio Tinto lost only 6 basis points. Ultimately, it looks like anything that remotely looks like taking risk will continue to be shunned, and unfortunately for Fortesque, they didn’t get a pass.

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