The S&P/ASX 200 (ASX: XJO) staged a mid-session recovery finishing down just 0.4% on Tuesday after being as far as 1% lower.
ASX tech shares feel the heat
The sell-off was broad-based in terms of sectors with eight of the 11 sectors finishing in the red. But by and large, it was focused on the ASX tech sector which fell 3%.
This followed a sell-off in the likes of Facebook (NASDAQ: FB) and Apple (NASDAQ: AAPL) overnight, with ASX-listed tech facing a bigger problem.
Whilst global tech is seen as ‘expensive’ by many, Aussie tech tends to trade on even higher multiples almost solely due to the lack of other growth options available domestically. Hence the likes of Appen Limited (ASX: APX), down 5%, tend to sell off even more heavily when sentiment turns.
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It remains a ‘cyclical’ versus technology story with the energy sector continuing to rally, Santos Ltd (ASX: STO) up 2.5%, as the oil price hit another three-year high after OPEC+ announced an uninspiring production increase.
RBA halts sell-off
The RBA announced that rates would remain on hold, reiterating their previous position, with no change to the recent tapering of bond purchases.
The Governor highlighted the negative hit to growth in the September quarter but remains confident of a bounce-back in December whilst also predicting we will recover lost ground by the second half of next year.
Gold rallies, Bega lifts
The gold price rallied on a weakening AUD despite the commodity stagnating for several months. Long seen as an inflation hedge, it is more suited as a hedge against volatility.
Meanwhile, shares in Bega Cheese Ltd (ASX: BGA) were 1.3% higher after an analyst suggested it should merge with Fonterra (ASX: FSF) in an effort to extract synergies and effectively buy back its naming rights.
Record trade surplus
Australia achieved another record trade surplus which hit $15 billion in August, overcoming a precipitous fall in the price of iron ore.
Luckily, Australia’s exports of coal, gas and wheat were enough to offset the weakness. Similarly, imports fell likely due to the difficultly faced by many businesses in ordering and taking delivery of stock.
ASX 200 today
Looking ahead, the ASX 200 is expected to open higher on Wednesday after all three US benchmarks pushed higher overnight. To find out more, check out my US stock market report.
