The ASX200 had a tumultuous day, falling 0.57% in early trading before a mostly steady recovery throughout the day limited the damage to just 0.23% or 18.20 points, coming to a rest at 7,811.50.
The sectors were mostly flat except for some progress in Comm Services (+1.26%), which saw Telstra gain 2.14% as the telecom giant announced it would increase the prices of its mobile plans in the coming months.
Most of the damage was felt in Materials (-1.24%), Energy (-0.75%) and Utilities (-1.27%).
Practically all the largest miners fell: BHP (ASX:BHP) 1.35%, Fortescue (ASX:FMG) 1.6%, Rio Tinto (ASX:RIO) 1.31% and Pilbara Minerals 1.99%.
It was a similar story for energy stocks – Origin shed 1.66%, Meridian Energy 0.67% and AGL 1.90%. Whitehaven coal also fell 3.35%, Woodside Energy 0.38% and Santos 0.51%.
The worst-performing stocks were Insignia Financial Ltd, down 7%, and Orora Limited, down 4.37%.
The ASX200 has gained 0.93% over the last five trading days and sits 1.25% off its 52-week high.
US dollar safe haven of choice
According to global financial services and bank holding company State Street (NYSE:STT), long-term investors are becoming more risk-averse.
State Street’s Risk Appetite Index fell back to -0.09 in June revealing a modest risk-off bias across the month.
“Equity markets may have made new highs but long-term investors are getting more cautious,” State Street Global Markets head of macro strategy Michael Metcalfe said.
“After the recent moderate improvement in risk appetites in Q2, institutional investors rushed back to cash in June as a combination of positioning, political risk and cyclical doubts challenged views in both equity and bond markets.”
“The US will face its own political event risk later this year, but the lesson from June was that the US dollar remains investors’ safe haven of choice in the face of event risk.
“Long-term investor demand for the USD rebounded smartly in June, alongside demand for the Utilities sector in equities and cash more generally,” added Metcalfe.
The State Street Holdings Indicators showed that long-term investor allocations to equities fell 42bps to 53.2%. Allocations to fixed income also fell a similar amount (46bps) to 27.5%, which meant cash holdings rose 88bps to 19.3%.
State Street uses these indicators to measure investor confidence or risk appetite by analysing actual buying and selling patterns derived from State Street’s US$42 trillion in assets under custody and administration.
The month of June marked the largest rise in cash holdings since last August.
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