THE sharemarket closed sharply lower, shedding about $35 billion in value, with fewer buyers in the market on a public holiday in New South Wales.
Shares opened about 1.5 per cent lower after brutal selloffs in European and US markets on Friday.
By the close yesterday, the local market had extended early losses, with the benchmark S&P/ASX 200 Index down 111.6 points, or 2.8 per cent.
Patersons Securities associate director Mark Goulopoulos said the market's performance and trading volumes had been hit by a "low liquidity market" yesterday, which was a public holiday in NSW.
Turnover was 1.14 billion shares worth $2.92 billion, less than half the usual value, with nine of every 10 stocks falling.
"There's not been a situation of panic selling . . . if there [has been] any selling in the market there's not been a lot of buying interest on the other side."
The market closed ahead of the release of the US Institute of Supply Management (ISM) manufacturing survey, which could be a key turning point for local shares when they returned to normal trading today, he said.
IG Markets analyst Cameron Peacock said investors were trading off speculation about the euro zone debt crisis, and ongoing fears that China's economic growth was slowing, which could hurt demand for local resources.
"Some of these industrial metals are getting hammered on talk and speculation that demand out of China is slowing and that's why we're seeing the materials and energy names being [some of the] hardest hit today."
Financials and materials were the weakest performers, with both ending 3.2 per cent lower. ANZ fell 2.9 per cent to $18.94 as Australia's largest class action over its bank fees was set to go back to court on Monday. Mining giant BHP Billiton fell 2.5 per cent to $34.15, while fellow miner Rio Tinto shed 4.1 per cent to $59.30.
Energy stocks fell after oil prices declined on Friday, Woodside Petroleum shedding 2.7 per cent to $31.62, and Santos down 2.6 per cent at $11.08.
The weakest stock of the top 100 companies on the ASX was Aquarius Platinum, which plunged 11 per cent to $2.64.
All sectors lost ground except typically defensive health stocks, which rose 0.16 per cent, led by CSL, which was the strongest stock on the ASX 100, and one of only six companies on the index to add value, rising 1.2 per cent to $30.03.
Elders lost 5.2 per cent to 27.5 cents after it started offloading its struggling forestry business.
Frequently Asked Questions about this Article…
Why did the Australian sharemarket close sharply lower and lose about $35 billion in value?
The market opened about 1.5% lower after heavy selloffs in European and US markets, and extended losses to finish with the S&P/ASX 200 down 111.6 points (2.8%). Low liquidity on a public holiday in New South Wales and weak buying interest also hit trading, contributing to the roughly $35 billion fall in market value.
How did low liquidity and the NSW public holiday affect ASX trading volumes?
Trading volumes were much lower than usual — turnover was 1.14 billion shares worth $2.92 billion, less than half the typical value. Patersons Securities' Mark Goulopoulos said the 'low liquidity market' on the NSW public holiday reduced buying interest, which amplified the market decline.
Which sectors were the weakest on the day and why were materials and financials hit hard?
Financials and materials were the weakest sectors, each ending about 3.2% lower. Materials were pressured by talk and speculation that demand from China may be slowing (hitting industrial metals), while financials faced specific news such as ANZ’s class action over bank fees being set to return to court.
How did major companies like ANZ, BHP Billiton and Rio Tinto perform during the selloff?
ANZ fell 2.9% to $18.94 amid the bank fees class action returning to court. Mining giant BHP Billiton dropped 2.5% to $34.15, while Rio Tinto shed about 4.1% to $59.30 as resource names were among the hardest hit.
What happened to energy stocks such as Woodside Petroleum and Santos?
Energy stocks fell after oil prices declined on Friday. Woodside Petroleum fell 2.7% to $31.62 and Santos was down 2.6% at $11.08, reflecting the broader weakness in energy names.
Which individual ASX 100 stocks stood out as the weakest and the strongest on the day?
The weakest stock in the ASX 100 was Aquarius Platinum, plunging about 11% to $2.64. Defensive health stocks were the only sector to gain, rising 0.16% led by CSL, which was the strongest ASX 100 stock and rose 1.2% to $30.03.
What overseas risks were investors trading off and how might that affect Australian shares?
Investors were concerned about speculation around the euro zone debt crisis and ongoing fears that China’s economic growth is slowing. Those risks could reduce demand for Australian resources and industrial metals, which helps explain the pressure on materials and energy stocks.
Are there any upcoming data points investors should watch that could change the market direction?
Yes — the US Institute of Supply Management (ISM) manufacturing survey was due for release and was flagged as a potential turning point for local shares once normal trading resumed. Market reaction to that data could influence sentiment for ASX-listed resource and industrial stocks.
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