The S&P/ASX 100 (Index: ^AXTO) (ASX: XTO) has dropped 1% in late-lunchtime trading, as fear grips the markets.
Biotechnology company CSL Limited (ASX: CSL) and jobs advertiser Seek Limited (ASX: SEK) are among the companies most sold off in the top 100 today. The others being iron ore miner Mineral Resources Limited (ASX: MIN), James Hardie Industries plc (ASX: JHX) and QBE Insurance Group Ltd (ASX: QBE), all of which have dropped more than 4%.
CSL has also seen its shares fall 4.2% to $82.72, after the US Centre for Disease Control and Prevention (CDC) said overnight that flu vaccines aren't as effective as it is usually. Brendan Flannery, an epidemiologist at the CDC, says this season's flu vaccine only reduces a person's chance of getting the flu by 23% – and possibly even less for many adults. "Commonly, it's been closer to 60%," Mr Flannery says.
The reason seems to be that the more than two-thirds of the flu virus has genetically morphed, no longer matching the formulation in the vaccine. The problem for drug manufacturers is the nature of the flu virus. "The only thing predictable about the flu, is its unpredictability," said Mr Flannery.
CSL also has extensive operations in Switzerland, and the Swiss Franc soared as much as 30% higher against the Euro and US dollar, after the Swiss Central Bank lifted the cap on the country's exchange rate. That will impact on costs for CSL.
Shares in Seek are down 3.4% to $16.30. The company appears to be suffering after yesterday's announcement that Japanese firm Recruit Holdings was acquiring Peoplebank, Australia's largest IT and specialist recruiting firm, as well as Chandler Macleod, which provides HR services. Recruit's arrival in Australia and the two acquisitions may give the company the firepower to compete with Seek, Australia's leading jobs portal.
But in both CSL's and Seek's case, it appears investors have panicked and the sell-off is overdone. Both have strong, dominant brands and it will take much more than the issues mentioned above to cause serious damage to either.
