Fresh off its worst day in four months, the ASX 200 is slumping again on Tuesday, falling 65 points or just over one per cent to trade at 6,035 in lunchtime trade.
The Australian share market last traded below 6,000 in early June before running up towards 6,400 in the aftermath of what was a generally well received August results season.
All that looks to count for nothing now, with the ASX following Wall Street lower as US investors fret about the prospect of rising inflation.
Adding to the stock market’s woes are renewed concerns about the health of the Italian economy, with Ambrose Evans-Pritchard saying in the Australian Financial Review that “Italy is on the brink of a dangerous banking crisis as the red-blooded showdown between Brussels and Rome pushes the country’s borrowing costs to a five-year high.”
More sellers than buyers
On Wall Street, many of the popular tech stocks have been sold off in recent days on nothing more than their being more sellers than buyers.
The valuations of some US tech stocks look stretched, but others look attractive at these lower prices. Facebook shares, for example, are trading at around 22 times forward estimates despite consensus expectations of 37 per cent top line growth.
Here in Australia, healthcare stocks are getting slammed today, with CSL Limited (ASX:CSL) and Cochlear Limited (ASX:COH) bearing the brunt of the pain.
CSL shares have fallen $6.25 or 3.2 per cent to $190.87 and Cochlear shares are down $9.04 or 4.5 per cent to $193.34.
Last month, with the CSL share price trading at close to $230, I warned that from a valuation perspective, CSL shares were “off the charts.” Since then, CSL shares have fallen around 17 per cent.
Tech stocks on the nose
Like in the US, popular ASX tech stocks are also on the nose, with high-fliers Afterpay Touch (ASX:APT), Appen (ASX:APX) and WiseTech Global (ASX:WTC) shares falling between 5 and 7 per cent.
Last month the Bennelong Avoca Emerging Leaders Fund issued a dire warning on “vastly inflated” ASX tech stock market darlings, saying at some point the valuation merry-go round will stop, potentially abruptly.
With Afterpay shares now down over 30 per cent since they hit $23, and Appen shares down a similar amount in less than a month, it’s clear the fun police are in the ascendancy.