Global Share Market Meltdown

Australian sharemarket plunges, $A not spared in sell-off

• Scott Murdoch
• From: The Australian
• August 05, 2011 4:44PM

 

 

THE Australian sharemarket plunged to its lowest level in two years at today's close, wiping $60 billion from the value of stocks as investors became fearful a fresh financial crisis was about to emerge.

The biggest one-day fall on Wall Street since the start of the global downturn nearly three years ago sparked a wave of selling across the major Asian equities markets today.

In Australia, the S&P/ASX 200 experienced the worst performance since November 2008 as the market lost 171.1 points (4 per cent) to 4105.40. The All Ordinaries index was down 183.2 points to 4169.70.

The Australian dollar was not spared either, as the currency slipped from $US1.0689 to $1.0445, its lowest point for four months.
IG Markets analyst Ben Potter said markets feared for the future, especially ahead of the publication of key US unemployment numbers tonight.

Savaging on Wall Street was prompted by growing concerns that the world's largest economy was heading for a double-dip recession, while a resolution to the European sovereign debt crisis remained uncertain.

"You can't say much other than it's been a bloodbath today," he said.
"It seems all the fear and anxiety over the spreading of the European debt crisis to the larger nations of Italy and Spain, along with the dismal structural state of the US economy, collided last night with the result being a global equities rout.

"The losses today have been indiscriminate. Nothing has been spared."Mr Potter said market sentiment had worsened on economic uncertainty."For the first time since the GFC, we're seeing genuine fear and panic rippling through global markets again. Anyone who says they know where these markets are going is kidding themselves.

This rout could end next week, or in six months time, no one really knows."The futures market is predicting a bleak night across the major financial centres.

The Dow Jones is forecast to open down at least 62 points at the opening bell, while continental European markets are likely to be substantially weaker.

AAP reported that only two of the top 200 ASX-listed companies posted gains - education provider Navitas and taxi-fare service Cabcharge.

Every sector was down and the resources boom was forgotten, as the mining and energy sectors were down by more than 5 per cent.

IG Markets strategist Cameron Peacock said: "Everyone thought that after the (US) debt-ceiling issue was resolved, markets would move higher.

"All it really did was focus the markets on some of the structural problems in the US economy."

Mr Peacock said the release of new employment numbers in the US tonight could calm investors if they were positive.

"You get these panic days, people just liquidate portfolios indiscriminately and that's why we're seeing such broad-based losses.

"A lot of companies out there are in stellar financial condition and are doing very well, but the baby gets thrown out with the bathwater, as they say."

Mining giant Rio Tinto lost $4.58 (5.98 per cent) to $72, just one day after posting a record $7.3 billion in underlying net profit for the half-year.

The world's biggest miner, BHP Billiton, closed down $1.94 (4.84 per cent) at $38.12.
Fortescue Metals gave up 39c (6.36 per cent) to $5.74.

Gold miner Newcrest was down $1.45 (3.57 per cent) at $39.20.

Among energy stocks, Woodside Petroleum plummeted $1.95 (5.34 per cent) to $34.55, Santos fell 82c (6.65 per cent) to $11.52 and Origin Energy dropped 43c (3.05 per cent) to $13.66.

Banks and financials were down, too. ANZ lost 71c (3.58 per cent) to $19.10, National Australia Bank fell 90c to $21.77, Westpac was down 50c at $19.27 and Commonwealth Bank lost $1.29 (2.71 per cent) to $46.26.

Telstra was down 7c at $2.89.
Preliminary national turnover was 4.48bn shares, worth $9.96bn, with 63 shares up, 1,413 down and 171 steady.