Australian share prices appear unlikely to reverse a week of declines as the market prepares to open on Friday, providing bargain-hunting investors with the opportunity to set a floor for the Australian Securities Exchange (ASX).
The best indicator of the daily outlook is the S&P/ASX 200 March share price index contract which was trading 12 points (0.15%) lower than the previous settlement at 7,741 points at 8:50 am AEDT (9:50 pm GMT Thursday) due to Wall Street weakness.
The Australian benchmark ended down 0.5% at 7,749.1 points on Thursday with 10 sectors in the red, pushing accumulated losses this week above 4% and setting the scene for lower prices when the virtual opening bell rings at 10:00 am AEDT.
The threat of a full-scale trade war continued to unnerve investors in the United States where the three main averages dived to six-month lows on Thursday (Friday AEDT).
The losses on the day totalled 1.3% for the Dow Jones Industrial Average, 1.39% for the S&P 500 and 2% for the Nasdaq Composite.
Trade concerns were heighted by United States President Donald Trump’s threat to impose 200% tariffs on alcohol from the European Union in response to the bloc’s 50% tariff on U.S. whisky.
Burrell Stockbroking wealth adviser Adam Dight said the pullback in Australian share prices was creating opportunities to find value in quality companies.
“We are buying the dips, putting excess capital to work,” he said, referring to Suncorp’s (ASX: SUN) A$4.1 billion (US$2.6 billion) capital return and special dividend and an estimated $3.1 billion of dividends to be paid in March and April.
“There’s a lot of cash coming back into the market so it’s a case of picking the good stocks.”
Dight said forced sales by investors facing margin calls as the value of their debt-funded portfolios fell were opening up the chance for investors with faith in shares to acquire on price weakness.
“But if you think the world is coming to an end you don’t want to be in equities,” Dight said.
On fixed interest markets, the 10-year Australian Government Treasury bond yield was flat at 4.398% and the two-year yield was up 0.16% at 3.755%, respectively.
