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Large caps begin Q4 on the back foot as ASX plunges 3.8%

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All but one sector of the ASX 200 ended October in the red.

The S&P/ASX 200 index has experienced its third consecutive month of decline, with S&P Dow Jones Indices reporting a 3.78 per cent fall for Australia’s benchmark index in October.

The firm said that Australian large caps kicked off the fourth quarter on the back foot, while other areas of the local share market also suffered significant drops during the month.

“Mid-caps and small-caps did even worse than blue chips, with the S&P/ASX MidCap 50 and the S&P/ASX Small Ordinaries plunging 6.9 per cent and 5.5 per cent, respectively,” it said.

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Additionally, the S&P/ASX Emerging Companies was reported to be down by 4.56 per cent. Falls were also observed for the S&P/ASX 20 (-2.73 per cent), the S&P/ASX 50 (-3.08 per cent), the S&P/ASX 100 (-3.60 per cent), and the S&P/ASX 300 (-3.80 per cent).

Within the S&P/ASX 200, the utilities sector was the only positive performer in October with a gain of 1.68 per cent. Information technology plunged 7.55 per cent and was the worst-performing sector for the month, closely followed by health care, which fell 7.22 per cent.

The next worst-performing sectors were industrials (-6.43 per cent), real estate (-6.10 per cent), energy (-5.06 per cent), and consumer discretionary (-4.85 per cent).

These were followed by the consumer staples (-3.96 per cent), financials (-3.60 per cent), communication services (-2.93 per cent), and materials (-0.81 per cent) sectors.

The S&P/ASX 200 is now in the red year-to-date with a fall of 0.21 per cent. The sector with the largest decline so far this year is health care (-14.86 per cent). Real estate (-5.81 per cent), consumer staples (-2.84 per cent), and financials (-0.94 per cent) are all also down.

Information technology is up 13.95 per cent year-to-date, representing the largest gain among the sectors. Next were consumer discretionary (9.77 per cent), energy (8.43 per cent), utilities (7.10 per cent), and communication services (5.94 per cent).

Additionally, the materials (1.67 per cent) and industrials (0.58 per cent) sectors are also in the black for the first 10 months of 2023.

Turning to the other major indices, the S&P/ASX 20 (0.76 per cent), the S&P/ASX 50 (0.94 per cent), and the S&P/ASX 100 (0.23 per cent) are all up year-to-date.

Meanwhile, the S&P/ASX Emerging Companies (-9.71 per cent), the S&P/ASX Small Ordinaries (-6.05 per cent), the S&P/ASX MidCap 50 (-4.30 per cent), and the S&P/ASX 300 are all down for the year.

AMP chief economist Shane Oliver has warned that the risk of further weakness in the local share market remains high, despite Australian shares having already fallen by more than 8 per cent from the levels reached in July this year.

“The ongoing rising trend in bond yields is still ramping up the pressure on share market valuations which are already stretched; central banks are continuing to signal high for longer interest rates with some, like the RBA, looking like they will hike more,” Dr Oliver said.

“The risk of recession remains high; the risk of an escalation to involve Iran in the Israeli conflict, which would directly threaten oil supplies, remains high; this would add to inflation and recession fears; and uncertainty remains high around China’s economy and property markets. So, the ride for shares is likely to remain volatile in the near term.”

Large caps begin Q4 on the back foot as ASX plunges 3.8%

All but one sector of the ASX 200 ended October in the red.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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