The Australian share market closed loweron Monday, plunging by more than 3.5 per cent on the worst trading day in a month.
The local bourse opened almost three per cent lower on weak US and European leads, as global investors feared Greece would default on its mounting debts.
The market clung to losses in early trade, even after the Australian Bureau of Statistics announced the economy had posted a trade surplus for the fifth straight month of $1.826 billion in July, as mining exports continue to hold weight in the face of a global economic slowdown.
At 1615 AEST, most stocks were trading lower, with the benchmark S&P/ASX 200 index down 156.2 points, or 3.72 per cent, to 4,038.5. The broader All Ordinaries index dropped 152.3 points, or 3.56 per cent, to 4,125.1 points.
The last time the market dipped to that level was in August, during a week when the S&P/ASX 200 index fell below 4,000 for the first time in a year.
On the ASX 24 on Monday, the September share price index futures contract lost 140 points at 4,036 points on a volume of 71,487 contracts.
CMC Markets chief market analyst Ric Spooner said while European debts were well disclosed, making the situation clearer than during the global financial crisis, investors were still uncertain as to how it would play out.
“The structure of the European Union, where restructuring initiatives require political agreement amongst many parties with competing national interests, increases the likelihood of a protracted period of uncertainty and elevated risk,” he said.
“The resulting lack of confidence amongst businesses, consumers and investors may have the effect of further weakening economic growth, which in turn feeds into greater credit risk.”
In local trade, the worst performing stock in the ASX 100 was Cochlear Ltd, which plunged 20.3 per cent, or by $14.68 to $57.50, after it announced it would recall of one of its hearing implant ranges. The implant manufacturer led the health care sector – the weakest on the market – to close 5.1 per cent lower.
Insurance company Suncorp Group Ltd was the weakest stock in the top 20. Its shares lost 5.7 per cent, or 47 cents, to $7.85.
Financials fell 3.9 per cent, with major losses across all the major retail banks. Westpac shed the most value of the big four, closing 93 cents or 4.6 per cent down to $19.20.
Major miners dropped on the back of lower offshore commodity prices, with BHP Billiton ending the day $1.46, or 3.9 per cent down to $36.45. Fellow miner Rio Tinto closed $3.05 or 4.3 per cent down at $68.20.
RBS Morgans private client adviser Bill Bishop said major liquid stocks were often sold down quickly when the market fell heavily into negative territory.
“Certainly there’s an offshore influence, but they’re also marked down because they’re easy to sell, it’s nothing to do with performance of the companies.”
Gold stocks were among the few that gained on the day, with AngloGold Ashanti rising 6.38 per cent to $9.17. Australia’s biggest gold miner, Newcrest Mining, was the best performer in the top 20, falling less than 0.2 per cent to $39.80.
The spot price of gold in Sydney was $US1,850.2 per fine ounce, down $US22.80 from Friday’s local close at $US1,873.00.
Preliminary national turnover was 2.23 billion securities changing hands for $4.79 billion, with only two of the top 100 stocks trading steady.
