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Aussie stocks drop sharply after ‘short squeeze’ cuts investor optimism

Published: (Updated: ) in Australian News by .

Shares have slipped early by more than 1.0 per cent on the Australian stock market but investors will be hoping for an eighth consecutive day of gains.

Stocks on the Australian market have slipped by more than one per cent in early trade after a bearish outlook by the US Federal Reserve hit sentiment among local investors.

The S&P/ASX200 benchmark index was lower by 70.3 points, or 1.14 per cent, at 6078.1 points after the first 30 minutes of trade today.

The All Ordinaries index was 67.9 points, or 1.08 per cent lower, at 6201.4.

READ MORE: 'It's just extraordinary': Aussie stocks rally past 6,000 points in 'short squeeze'

The early downturn follows seven consecutive day of gains.

The financial sector led the decline today, down 2.40 per cent, while the energy sector was lower by 2.29 per cent.

Health and materials were the only sectors higher, up 1.39 and 0.24 per cent respectively.

The ASX has shown sustained growth for six straight days.

The big banks were all trading sharply lower.

ANZ slipped 2.84 per cent to $20.17, the Commonwealth Bank lost 1.93 per cent to $70.22, NAB fell 2.68 per cent to $19.62 and Westpac edged lower by 2.79 per cent to $19.15.

Joshua Mahony, Senior Analyst at IG, said in European markets there is a difference between what the markets are showing and what people are experiencing in daily life.

A COVID-19 notice at the Australian Stock Exchange (ASX) in Sydney, Thursday, April 16, 2020. (AAP Image/Joel Carrett) NO ARCHIVING

"The disconnect between markets and the real economy has been intertwined with the decision from policymakers to go over and above to support the recovery," Mr Mahony said.

"However, with the FOMC monetary policy decision there is a fear that we could see a rare backwards step for markets today given the high likeliness of a pessimistic outlook and lack of action."

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The Australian dollar was buying 69.78 US cents at 10.30am AEST, down from 69.95 US cents at the close of trade yesterday.

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Source: 9News

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