Renewed fears about slowing global growth have wiped $47 billion off the value of the Australian share market, which suffered its biggest fall in more than four months.
Investors have followed those in London, Frankfurt, Paris and New York by selling off their financial stocks on concerns that banks could be exposed, with the market-dominating sector dragging the All Ordinaries index deep into the red.
The index finished Tuesday’s session down 2.78 per cent, its biggest decline since it sank 3.63 per cent on September 29.
The financial sector was down more than four per cent, meaning it has lost about 12 per cent of its value since the start of the year.
The big banks all lost four per cent or more, while mining giant BHP Billiton lost two per cent and Telstra fell just over one per cent.
“Everything the market is focusing on spells uncertainty or some sort of negativity, so it’s a bad cocktail for equity prices,” optionsXpress analyst Ben Le Brun said.
Those negative factors include persistent worries over the pace of Chinese growth, the glut of oil and resultant low prices, and resurgent worries over instability in Greece and the state of the country’s banks.
All four of Australia’s biggest banks took a hit on Tuesday, with their falls ranging from two per cent to more than four per cent.
Investors are moving their cash into the traditional safe havens of bonds and gold.
“The only sector to be doing OK is the gold sector … but that gold industry is pretty small,” CommSec market analyst Steven Daghlian said.
“Woolies is bigger than all the gold producers put together in Australia. So it doesn’t really dent the losses at all unfortunately.”
Every sector on the Australian Stock Exchange was in negative territory, with energy not far behind financials after oil prices resumed their slide overnight.
The decline could have been even worse had China’s volatile markets, and others in Asia, not been shut for the Lunar New Year holidays.
“I’m a bit of a believer in `out of sight, out of mind’. It’s not the worst thing necessarily given the start to the year we’ve had that China goes offline for a little while,” Mr Le Brun said.
“Unfortunately we’re still heading down the elevator chute.”
