THE Australian sharemarket closed more than 2.6 per cent lower to its weakest close in more than two years, amid global uncertainty following big falls on Wall Street over a downgraded economic outlook.
Rio Tinto shares shed almost 7 per cent and BHP Billiton shares fell more than 4 per cent. At the close of trade yesterday, the benchmark S&P/ASX 200 Index was down 106.9 points, or 2.63 per cent, at 3964.9, its lowest close since July 2009.
US stocks dived after the Federal Reserve announced mostly expected measures to support the US economy, but painted a grim economic picture. The Dow Jones Industrial Average plummeted 283.82 points, or 2.49 per cent, to close at 11,124.84. The broader S&P 500 dropped 35.33 points, or 2.94 per cent, to 1166.76, and the Nasdaq Composite shed 52.05 points, or 2.01 per cent, to 2538.19.
Intersuisse adviser Andrew Sekely said investors pulled the Australian market lower. "It followed on from the heavy falls in the US and we've following suit. As long as news from overseas continues to be bad, it's unlikely that we'll see any recovery in local markets," he said. He predicts the domestic market will finish flat to weak. "But markets are so volatile it's impossible to say."
At the close of trade, BHP Billiton was down $1.50 or 4.04 per cent, at $35.63, and Rio Tinto was down $4.49, or 6.45 per cent, at $65.10.
Santos shares were down 37?, or 3.22 per cent, at $11.12, while Woodside shares were $1.15 lower, or 3.41 per cent, at $32.53.
RBS Morgans client adviser Bill Bishop said volatility in America has translated into a weak day for stocks. "The lack of a cohesive policy in either Europe or America is driving this," he said.
One of the only bright spots came from Foster's, which said on Wednesday night its board would recommend a SABMiller takeover offer to its shareholders. Foster's shares closed up 37?, or 7.57 per cent at $5.26, making it the highest traded stock by volume with almost 308 million shares traded.
Treasury Wine Estate, spun out of Foster's Group earlier this year, was up 11?, or 3.24 per cent, at $3.51.
Shares in OrotonGroup rose 6.9 per cent to $7.67 after the accessories retailer said annual profit had risen 8 per cent and sales so far this fiscal year had exceeded expectations.
Market turnover reached 2.66 billion shares worth $7.08 billion, with 189 stocks up, 934 down and 323 steady.
The price of gold in Sydney closed at $US1771.40 an ounce, down $US41.20 from $US1812.60 on Wednesday.
Frequently Asked Questions about this Article…
Why did the Australian sharemarket drop more than 2.6% today?
The ASX fell after heavy losses on Wall Street following the US Federal Reserve’s announcement and a downgraded economic outlook. US market weakness and grim overseas news pulled local investors lower, driving the S&P/ASX 200 down more than 2.6%.
How much did the S&P/ASX 200 fall and why is the close significant for investors?
The S&P/ASX 200 lost 106.9 points, or 2.63%, closing at 3,964.9 — its weakest close since July 2009. That low close highlights heightened market volatility and the impact of global economic worries on Australian equities.
How did major mining stocks like Rio Tinto and BHP Billiton perform during the sell-off?
Major miners were among the biggest decliners: Rio Tinto shares fell about 6.45% to $65.10 (down $4.49) and BHP Billiton dropped about 4.04% to $35.63 (down $1.50), weighing on the broader market.
What happened to energy stocks such as Santos and Woodside in the market decline?
Energy stocks were weaker: Santos shares fell about 3.22% to $11.12, while Woodside closed down $1.15, or roughly 3.41%, at $32.53, reflecting the widespread sell-off across sectors.
Were there any stocks that rose despite the market downturn?
Yes. Foster’s was a clear bright spot after its board said it would recommend a SABMiller takeover offer — Foster’s jumped about 7.57% to $5.26 and was the highest traded stock by volume. Treasury Wine Estate and OrotonGroup also rose (Treasury Wine Estate up about 3.24% to $3.51; OrotonGroup up 6.9% to $7.67).
How did US markets move and what role did the Federal Reserve’s announcement play?
US markets fell sharply: the Dow Jones dropped 283.82 points (2.49%) to 11,124.84, the S&P 500 fell 35.33 points (2.94%) to 1,166.76, and the Nasdaq lost 52.05 points (2.01%) to 2,538.19. The Fed’s support measures were largely expected, but its downbeat economic commentary contributed to the sell-off and global contagion.
What are market turnover and breadth figures from the session — and what do they tell everyday investors?
Turnover reached 2.66 billion shares worth $7.08 billion. Market breadth was weak: 189 stocks rose, 934 fell and 323 were unchanged. Those figures point to broad-based selling rather than isolated declines, a signal of elevated market-wide stress.
What happened to the price of gold in Sydney amid the market volatility?
Gold in Sydney closed at US$1,771.40 an ounce, down US$41.20 from US$1,812.60 the previous session, reflecting the same market forces that hit other asset prices during the risk-off environment.
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