The S&P / ASX200 (ASX: XJ) is down 0.5% in lunchtime trade as US futures point to another session heavily in the red on Wall Street tonight. News wires even reported that the Chicago futures exchange briefly suspended trading due to violent moves lower potentially triggered by algorithmic or robot-style trading.
On the ASX there are plenty of well knowN companies tumbling lower. So let’s take a look at what might be behind the share price action.
The Appen Ltd (ASX: APX) share price is down 4.2% to $13 today as investors globally worry about the valuations of tech shares that trade on huge multiples of sales and profits. If interest rates in the US rise as expected analysts will start to use higher discount rates to calculate the net present value of companies. Therefore those with most long-term growth priced in are vulnerable to the steepest downward revisions of the value of their future cash flows.
The Pendal Group Ltd (ASX: PDL) share price is down 5% to $8.10 today as equity markets continue to drop around the world. Pendal is the former BT Investment Management Group part owned by Westpac Banking Corp (ASX: WBC). It also operates the JO Hambro international equities management business and in total has around 20% of its assets invested in British pound denominated assets. As such it’s vulnerable to a falling British pound as the country runs out of time to agree a Brexit deal with the EU.
The Carsales. Com (ASX: CAR) share price is down 2.7% to $11.49 today despite it releasing no specific news to the market. The shares are now down more than 25% from highs hit just back in August 2018. Investors are probably worried about the macro outlook for the Australian economy, with weaker-than-expected GDP growth reported yesterday. House prices are also falling in Sydney and Melbourne which is one factor major car dealership Automotive Holdings Group (ASX: AHG) has already blamed for a recent profit downgrade.
The Medibank Private Ltd (ASX: MPL) share price hit a 52-week low of $2.36 today as investors worry that tougher economic times for Australians may see more of them take their chances with free or discounted public healthcare services before private healthcare. Medibank also recently warned it had lost a major contract with the Australian Defence Force that carried an operating profit of around $30 million.
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