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ASX moves towards possible first loss in four sessions


The S&P/ASX 200 dropped 20 points or 0.27 per cent by mid-session

A resurgence in growth concerns on Wall Street helped dragged the Australian Securities Exchange (ASX) towards a possible first loss in four sessions despite records for Macquarie Group and Aristocrat Leisure.

The S&P/ASX 200 dropped 20 points or 0.27 per cent by mid-session. Trading followed the recent pattern of early weakness giving way to a recovery. At its low, the index was off 54 points.

An eight-week high in bond yields boosted lenders, but sapped buying interest in alternatives to bonds. Macquarie Group climbed more than 5 per cent after reporting strong trading conditions had persisted into this half.

Wall Street wobbled as analysts queued up to downgrade growth expectations in the wake of Friday’s big jobs miss. Goldman Sachs downgraded its full-year GDP target as trade resumed after the Labor Day long weekend.

Morgan Stanley reduced its rating on US equities to ‘Underweight’. JPMorgan Chase predicted a slowdown in growth as the delta variant depresses services sector activity.

The Dow Jones Industrial Average (DJIA) dropped 269 points or 0.76 per cent. The S&P 500 declined 0.34 per cent as gains in tech stocks partially offset weakness in cyclical sectors most exposed to any slowdown.

Market sentiment was battered by a dampened economic outlook amid the continued spread of the coronavirus Delta variant. Meanwhile, the slowing pace of economic recovery was seen to be overshadowing hopes that the central bank will retain its accommodative monetary policy stance for a little longer, Kalkine Group CEO Kunal Sawhney said.

In the coming days, investors are expected to continue assessing concerns over increasing virus infections against prospects of Fed maintaining its monetary policy support. Any hawkish stance from the central bank on bond tapering or interest rates may not emerge as welcome news for the stock market, he added.

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