After hitting a new all time high yesterday, the ASX200 is suffering through a shocker of a day. The benchmark index dropped sharply after the market opened this morning and has maintained a decline of around 2.2% throughout the day.
Today’s losses are being led by falls in the Consumer Discretionary and Financial sectors. The big four banks, along with Macquarie, were particularly hard hit, as was Pilbara Minerals, which is down by more than 6% n afternoon trade.
Today’s poor market performance follows big falls on the US markets overnight, as reaction to weak economic data and disappointing earnings that have only grown fears of a rapid economic slowdown in the US. Those concerns outweighed news that the Bank of England cut UK interest rates last night for the first time since 2020.
Technical market watchers are concerned that the ASX is forming an "Evening Star" pattern on the candlestick chart — a bearish reversal signal that could mark the top of the market’s current uptrend.
ABS home loan commitments
The ABS has released home loan commitments data for June, which show national home loan commitments, excluding refinancing, rose by 1.3% during the month to $29.19 billion. Property demand is not expected to soar during the remainder of the year with the RBA likely to keep rates on hold until 2025.
Oxford Economics Australia senior economist Maree Kilroy commented on the data:
“Once again investors outpaced owner-occupiers, increasing 2.7% versus 0.5%. Helping to stoke investor demand is a very tight rental market and higher gross rental yields. The spread between owner-occupier and investor mortgage rates has also progressively tightened with banks competing for market share.
“For the past four months, Queensland has been on par with Victoria in terms of investor demand, Queensland has increased 34.5% over the past year whilst policy tweaks towards investors in Victoria has contributed to a more muted 9.4% increase.
“A lead indicator for the detached housing market, loans for the construction of dwellings increased 2.9% (+3.4% m/m in volume terms). Up 14.2% on a year ago, this is another sign we are past the worst for the new house market.”
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