Prices are set to keep falling on the Australian sharemarket on Monday as investors respond to the sell-off in the United States, which has officially become a correction.
An 0.76% drop in the ASX 200 index on the open is indicated by futures trading on the Australian Securities Exchange (ASX), which priced the June share price index contract 65 points under the previous settlement at 8,487.000 at the time of writing.
“We’re expecting a fall when our market opens for the week,” CommSec Equity Market Strategist James Gruber said.
The catalyst was the performance on Wall Street when the three main benchmarks closed down by at least 1.7% on Friday (Saturday AEDT) because of worries about an escalation in the U.S.-Israeli war against Iran.
Each closed at their lowest levels in more than seven months, and the Dow Jones Industrial Average joined the Nasdaq Composite Index in entering correction territory, representing a decline of 10% or more from a recent market high.
The Dow and S&P 500 each fell 1.7% while the Nasdaq shed 2.2% as the length of the war passed one month.
"Clearly, the overall tone has turned very negative and now we have broken down into correction territory," SlateStone Wealth partner and chief market strategist Ken Polcari was quoted as saying in a Reuters article.
"In the end, I would view this as a big opportunity, but would not be surprised if we see a drawdown anywhere between 15% to 20% before it is over."
The Australian market had ended lower on Friday with the ASX 200 easing 0.1% to close at 8,516.3 points amid continuing uncertainty about the Middle East conflict.
However, share prices rose on average over the week after three weeks of losses.
In fixed interest markets, yields on Australian Government bonds rose as two year rates added 0.44% to 4.820% and 10 year rates put on 1.20% to 5.136% at the time of writing.
