Recession dread drives market slump
THE sharemarket closed at a more than two-year low yesterday, with about $18 billion wiped from the value of companies as investors fretted about the possibility of a global recession.
THE sharemarket closed at a more than two-year low yesterday, with about $18 billion wiped from the value of companies as investors fretted about the possibility of a global recession.The benchmark S&P/ASX 200 Index fell 61.7 points, or 1.56 per cent, to 3903.2.RBS Morgans private client adviser Craig Walker said a report flagging iron ore price falls in coming years amid growing supply put the brakes on miners such as Fortescue and Rio Tinto."In this type of market . . . negative news tends to snowball," Mr Walker said.A slight rally about noon was short-lived, driven by ratings agency Standard & Poor's reaffirming its top-notch AAA rating for Australia.Also, a G20 finance ministers and central bankers meeting in Washington fuelled expectations there might finally be some action taken over debt-laden Europe.Mr Walker said the market finish was a reasonable result, given Wall Street's Dow Jones Industrial Average closed 3.51 per cent weaker overnight. The domestic market shed about 5.7 per cent this week and is down more than 8 per cent this month.Mr Walker said reasonable performances by financial stocks were more than offset by weakness in the mining sector.Commodity prices including gold fell overnight. Heavyweight miner BHP Billiton was down $1.08, or 3 per cent, at $34.55 while Rio Tinto was down $2.45, or 3.8 per cent, at $62.65. Fortescue slumped 51?, or 9.3 per cent, to $4.95 and Atlas Iron backtracked 26?, or 7.9 per cent, to $3.04.Department store chain Myer was one of the few stocks in the green, putting on 2? to $2.12.Commonwealth Bank was the only big bank to gain ground, up 40? at $43.33. Westpac was 19? weaker at $18.73, ANZ was down 23? at $18.75 and National Australia Bank was down 51? at $21.01.Trading volumes were high, with 2.85 billion shares worth $7.72 billion changing hands.Gold closed in Sydney at $1745.68 an ounce, down $25.72 from Thursday's close.