Bitcoin plunged on the day that central American country El Salvador adopted the cryptocurrency as legal tender. Meanwhile, technology stocks drove the Nasdaq to a new record high.
El Salvador’s sovereign bonds fell as much as 6 percentage points in secondary market trading, to 87.11, as the price of bitcoin dropped sharply.
Bitcoin prices dropped as much as 18 per cent, to around $US43,119, a low not seen since mid-August, according to financial markets news service Refinitiv Eikon.
At 4:50pm AEST, Bitcoin had recovered some losses and was at $US45,240 per digital coin.
Market traders have said the sharp sell off was also caused by a Supreme Court ruling allowing El Salvador’s President, Naib Bukele, to serve two consecutive terms.
In June, markets reacted negatively when El Salvador said it would become the first country to accept the cryptocurrency as legal tender.
ASX weighed down by commodities
The local share market ended the day lower after commodity prices fell overnight and a number of companies traded ex-dividend.
Miners, healthcare stocks, consumers and real estate companies weighed on the market.
Banks, oil stocks and utilities made gains.
The All Ordinaries index dropped by one-quarter of a percentage point to 7,808, off its lows.
The ASX 200 index lost the same percentage and closed at 7,512.
The best performer on the ASX 200 was investment bank Macquarie Group (+4.7pc) after it delivered a trading update. Macquarie rose despite predicting a “slightly lower” first-half profit.
Also going up were investment firm Washington H Soul Pattinson (+5.6pc) and business software firm Technology One (+4.7pc). Technology One soared to a record high after it agreed to buy Scientia Resource Management, a UK company servicing the higher education sector.
Leading the falls were gold miners St Barbara (-6.7pc), Northern Star Resources (-5.3pc), and auto parts firm Eagers Automotive (-5.9pc).
Logistics and transport firm Qube rose 4.6 per cent after saying it would pay $90 million to buy export grain facility Newcastle Agri Terminal in NSW.
Gold and oil prices fell again overnight as investors worried about demand for fuel and amid rising COVID-9 infections around the globe.
But they steadied today.
At 4:50pm AEST, spot gold was flat at $US1,794.65 an ounce and Brent crude oil rose half a per cent to $US72.04 a barrel.
The Australian dollar was down one-fifth of a per cent in late afternoon trade to around 73.70 US cents, coming off the day’s high.
Colonial First State deceives super customers 13,000 times
A court has found that the Commonwealth Bank-owned investment firm Colonial First State (CFS) misled and deceived superannuation customers to keep them in a higher fee fund.
In a case brought by the corporate regulator, the Federal Court ruled the trustees of CFS’s First Choice fund were liable for encouraging members of the fund to reamin rather than move to a cheaper MySuper product, a low-fee product required by law.
The court found that, on at least 12,978 occasions, Colonial First State made misleading representations regarding investment decisions.
ASIC Deputy Chair Sarah Court said superannuation fund members needed to “receive clear and accurate information to make informed decisions”.
“These actions did not put members’ interests first,” Ms Court said.
The Court declared that, between March 18, 2014, and July 21, 2016, CFS engaged in misleading and deceptive conduct by sending 12,911 letters to members containing misleading representations about investment directions.
It also found that CFS made false or misleading representations and engaged in misleading and deceptive conduct in 70 calls to members about investment directions and failed to provide a “general advice warning”, as required by the Corporations Act in 17 calls to members.
Colonial agreed to the declarations being made and a penalty hearing will be held next month.
Commonwealth Bank shares rose three quarters of a per cent to $102.92.
Wall Street mixed
Meanwhile, the Nasdaq reached a new record high, driven by IT giant Apple and streaming service Netflix.
The S&P 500 closed lower as investors balanced worries about the slowing pace of economic recovery with expectations that the Federal Reserve would maintain its accommodative monetary policy.
Apple rose almost 1.6 per cent and Netflix added 2.7 per cent, both hitting record highs.
Globalt Investments senior portfolio manager Tom Martin said investors were gravitating towards Big Tech.
“As people feel a bit uncertain about how COVID will play out, you don’t have your reopening worries with those companies,” he said.
The rest of the market was less optimistic.
Of the sub-indices, eight of the 11 traded lower, with economy-sensitive sectors such as industrials, utilities and real estate indices all dropping.
The Dow Jones Industrial Average fell 0.8 per cent, to end at 35,100 points, while the S&P 500 lost 0.3 per cent, to 4,520, and the Nasdaq Composite climbed 0.07 per cent, to 15,374.
The S&P 500 remains up about 20 per cent, year to date, and the Nasdaq is up about 19 per cent.
Boeing dropped 1.8 per cent after Ireland’s Ryanair said it had ended talks with the plane-maker over the purchase of 737 MAX 10 jets worth tens of billions of dollars, due to differences over price.
Boris tax hit weighs on FTSE
UK Prime Minister Boris Johnson announced higher taxes while Bank of England policy maker Michael Saunders said interest rates rises are expected to be limited.
The tax increase is to help rescue Britain’s health system, the National Health Service, from huge backlogs caused by the COVID-19 crisis.
National insurance, a payroll tax, will rise by 1.25 per cent from next year with the increases expected to raise 36 billion pounds ($67 billion) over the next three years.
The FTSE 100 fell 0.6 per cent, to 7,149.