The S&P/ASX200 is lower today, dropping 93.30 points or 1.25% to 7,357.40. The index has lost 0.60% for the last five days but sits 2.78% below its 52-week high.
All sectors were down or flat in mid-afternoon trade, with Utilities faring the worst (down 2.12%) and Health Care and Information Technology looking relatively resilient, down only 0.50% and 0.40% respectively.
Global markets breathe out
eToro market analyst Josh Gilbert had this to say about recent developments, including why the market is flat today despite the RBA’s rates pause:
"Global markets look to be taking a breather, with equity futures seeing a broad sell-off as Fitch Ratings downgraded the US from its top-tier sovereign credit rating. The sell-off we’re seeing is likely overdone, but it will probably push the ASX’s opening lower today, despite yesterday’s positivity.
“With another pause from the Reserve Bank yesterday, investors may have seen the last hike in this current cycle, with yesterday’s statement pointing towards a bias for leaving rates on hold.
“Markets believe we’ve reached the peak of interest rates and that the tightening we’ve already seen from the RBA is working its way through the economy, with inflation slowing and consumption cooling.
“While this could signal the end of the road for the RBA, the focus now shifts to how long rates will remain high, with rate cuts not anticipated until mid-2024.
“The materials sector will likely come under pressure today, with iron ore tumbling in recent days.
"Data from China revealed a significant plunge in new home sales in July, raising concerns about the effectiveness of China's efforts to kick-start its economic recovery. The efforts we’ve seen so far aren’t having their desired effect, and more meaningful measures will be needed in order to stop the economic slump.
“Finally, Manchester United shares fell by 8.5% overnight. The English football club had seen shares bolstered recently on takeover talks, but reports claim the takeover has been paused.
"The recent optimism from investors makes sense, as investment from the UAE has already proven successful for clubs in the UK, helping to elevate Manchester City as one of the most valuable sporting clubs in the world.
"A failed takeover means a lack of investment, which the club needs to purchase the world's best players and return to the top of English football, which would help drive the club back towards profitability."
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