So much for that positive start to the week we were after…
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) fell sharply on Monday morning, losing as much as 1.5% and erasing much of the gains recognised during the latter half of last week. It's currently trading 1.2% lower at 5203 points.
The morning's losses can likely be attributed to comments made by the US Federal Reserve vice chairman, Stanley Fischer, who indicated a September interest rate hike could still be on the cards.
Following last week's sudden market crash, investors had grown hopeful that such a move would be delayed, possibly until next year. Higher US interest rates could impact the global rate of growth, while they could also attract investment money away from Australia.
Closer to home, Woolworths Limited (ASX: WOW) is acting as a drag on the ASX this morning after its credit rating was downgraded one notch to Baa1. Citi and Credit Suisse both cut their price targets on the stock with the shares falling 3.2% to $26.54. Wesfarmers Ltd (ASX: WES) was also down 1.7%.
Elsewhere, Australia's major banks continued to fall, despite rising expectations of another official interest rate cut locally before the end of the year.
Australia and New Zealand Banking Group (ASX: ANZ) was down 1.7%, while National Australia Bank Ltd. (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Commonwealth Bank of Australia (ASX: CBA) were down 1.5% each.
Although now represents an excellent time to load up on high-quality companies trading at discounted prices, investors should also continue to expect volatility in the near future.
