The Australian sharemarket tumbled at its opening, hitting fresh seven-month lows, following major falls on Wall Street and European markets over the weekend.
The market dived below the key 4,000 point barrier in early trade, as investor sentiment fell on the back of poor US jobs data and weak economic news from China and Europe.
At the official market open, the benchmark S&P/ASX 200 index sank 1.7% to 3,994.5 points and the broader All Ordinaries Index dropped 1.72% to 4,045.7 points.
Michael McCarthy, chief market strategist at CMC Markets, warned that Asian markets were “poised on the edge” this morning.
“Action today is likely to determine direction for local markets for weeks to come,” McCarthy said.
“A plunge through the support and close below will point to further short term losses.
“However, the market pattern on all five days last week saw weak openings followed by buying across the day.”
The Australian dollar has fallen to a fresh eight-month low, on the back of disappointing data out of the United States and China.
At 11am, the local unit was trading at US96.44 cents, down from 97.02 cents on Friday.
Earlier today, the currency hit as low as US96.38 cents, its lowest point since October last year.
Jobs website Seek Ltd has maintained full-year earnings guidance and says it will raise $125 million to repay debt and fund investment.
Seek has announced plans to issue subordinated notes through an offer to eligible shareholders, as well as through a bookbuild with retail brokers and institutional investors.
The company said funds raised would be used to pay down part of its existing syndicated debt facility, provide greater diversity in the source and maturity profile of its funding and offer flexibility to fund further investment in the business.
“Seek subordinated notes will further strengthen Seek’s capital position by providing diversity, flexibility and increased tenure to its capital structure,” Seek chief financial officer John Armstrong said in a statement.
All four major banks are predicting the Reserve Bank will cut its cash rate by 25 basis points to 3.5% at its meeting tomorrow.
Paul Bloxham, chief economist at HSBC, said he expects a 25-basis-point cut tomorrow with “a risk” that the RBA could move by 50 basis points.
MYOB said a rate cut would be key for small business, with more than a quarter of SMEs using their home loan to finance their business activities in some way.
“For many business owners, even those without commercial finance, an interest rate move doesn’t just affect their ability to repay the family home loan,” MYOB chief executive Tim Reed said.
“For too many, home loan interest rate moves also affect their ability to keep their livelihood on an even keel.”
The number of job advertisements on the internet and in newspapers fell 2.4% in May after falling 0.8% in April, according to research by ANZ.
Advertisements were 4.3% below the level of May 2011.
“Job advertising trends are sending a signal of a softening in labour demand in Australia, including more recently in the mining states,” said ANZ head of Australian economics and property research Ivan Colhoun.
“This mainly reflects continuing weaker performance in the non-mining sectors of the economy.
“Traditionally, weaker job advertising has been a reliable lead indicator of both lower interest rates and rising unemployment.”
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