• The ASX fell by 2% on Monday
  •  Global risk-off sentiment was sparked by Fed Chairman’s comments on Friday
  • Aussie retail sales at fresh record levels

 

Risk assets fell globally, spooked by Jerome Powell’s Jackson Hole speech on Friday.

Shares in Asia tumbled on Monday, with the broad ASX index falling 2% and the Tech sector shedding more than 4%.

On Friday, US Fed Chairman Powell told a meeting of US central bankers in Jackson Hole that the Fed needs to keep on hiking interest rates to stop inflation from becoming a permanent aspect of the US economy.

“We must keep at it until the job is done,” Powell said, twice, in his unusually short 8-minute speech.

“These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,” he added.

The comments sent Wall Street into a tailspin, with all major US stock indexes crumbling by over 3%, and catapulting the US dollar to hit a 20-year high.

Against the Aussie, the greenback is now trading at US 68.44c and is on course for a 2% rise in August.

The Chinese central bank, the PBOC, has reacted to the stronger US dollar by setting stronger-than-expected currency fixings over the last few days.

The PBOC has today set its Yuan fixing at 96bps above the market forecast, hoping to cap the Yuan’s losses.

On the ASX, selloff in the Tech sector was brutal with all blue chip tech shares like Wisetech, Xero, and NextDC falling by more than 5%.

Financial, Mining and Energy also suffered a 2% selloff as investors executed their  ‘sell now, ask later’ strategy.

Meanwhile, Australian retail sales jumped by 1.3% in July to $34.7 billion according to ABS data today –  giving hopes the economy might be on the rebound.

These are record sales figures, well above consensus the forecast of a 0.3% increase.

“It’s clear that Australia’s consumers are not throwing in the towel in the face of soaring consumer prices and rising interest rates,” said Marcel Thieliant, a senior economist at Capital Economics.

Thieliant told CNBC that the huge retail data reflects both the surge in labour income this year and the still-high household savings rate in Australia.

 

BIG CAP WINNERS

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A2Milk (ASX:A2M) jumped 9% after reporting a 59% increase in EBITDA for the full year to NZ$196.2 million.

This was off the back of 19.8% rise in revenues to NZ$1.45 billion. A2M has also announced a NZ$150 million share buyback.

 

BIG CAP LOSERS

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Tech stock Life360 (ASX:360) was the the worst performing large cap today, down by 9% on the back of the broad brushed selloff of tech stocks.

Mining stocks like Grange Resources (ASX:GRR) (-26%), Lake Resources (ASX:LKE) (-10%) and Chalice Mining (ASX:CHN) (-9%) all got hammered today on risk off sentiment.