After posting a healthy 2.4% gain in July, the S&P/ASX 200 Index (ASX: XJO) is struggling so far in August.
The benchmark Aussie index closed down 0.9% on Friday, August 1. And after briefly rising into the green in morning today, the index is down 0.2% at time of writing in early afternoon trade.
ASX 200 gold miners count among the bright spots on Monday, with Northern Star Resources Ltd (ASX: NST) shares up 6.0% and Evolution Mining Ltd (ASX: EVN) shares up 4.5%, to name just a few.
But the strength of the Aussie gold miners has not yet been sufficient to lift the index out of the red.
Here's what's happening.
ASX 200 catching headwinds out of the US
The selling action we're seeing on the ASX 200 today is significantly less than the sell-down in US stock markets on Friday.
Still, many Aussie stocks have come under selling pressure with the S&P 500 Index (SP: .INX) closing down 1.6% on Friday, while the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) tumbled 2.2%.
As for how some of the biggest US stocks performed on Friday:
- Nvidia Corporation (NASDAQ: NVDA) shares dropped 2.3%
- Microsoft Corp (NASDAQ: MSFT) shares fell 1.8%
- Apple Inc (NASDAQ: AAPL) shares fell 2.5%
- Amazon.com, Inc. (NASDAQ: AMZN) shares plunged 8.3%
The sell-down in US stock markets, and the resulting pressure on the ASX 200 today, came amid surprising weak jobs data in the world's top economy.
The US Bureau of Labor Statistics reported that 73,000 new jobs were added in July, far below the consensus forecast of 100,000.
Investor confidence was further shaken with the prior two months of figures revised materially lower.
And US President Donald Trump looks to have further stirred up market angst when he said Bureau of Labor Statistics commissioner Erika McEntarfer needed to be fired for playing politics with the jobs data.
What are the experts saying?
Commenting on the weak US jobs figures that sent the S&P 500 tumbling on Friday and is throwing up headwinds for the ASX 200 today, Jeff Schulze, head of economic and market strategy at ClearBridge Investments, said investors may be repositioning with a potential US recession in mind.
Schulze said (quoted by Bloomberg):
Today's release is best characterised as 'bad news is bad news' in our view. With job creation at stall-speed levels and the tariff headwind lying ahead, there's a strong possibility of a negative payroll print in the coming months which may conjure up fears of a recession.
As for Trump's verbal attack on the Bureau of Labor Statistics' McEntarfer, Neil Dutta, head of economics at Renaissance Macro Research, said, "The US public statistics represent the gold standard. Calling them into question because they tell you something you don't like undercuts market confidence."
Even the increased odds of an interest rate cut from the US Federal Reserve following the weak jobs data weren't enough to support US stock markets on Friday.
"Lots of folks have their eyes on the exit door," Joe Saluzzi, co-head of equity trading at Themis Trading, said (quoted by Bloomberg). "Weak job numbers should solidify the rate cut story for September, but there is some worry that the Fed is waiting too long."
Despite the early pullback in August, the ASX 200 remains up 13.1% since this time last year.
