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Banks suffer on horror day on share market

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The biggest one day fall in more than three years has wiped almost $4.4 billion from the share market’s value.

The big four banks were the main reason for the massive plunge, with ANZ enduring its worst session in almost seven years after tapping investors for $2.5 billion.

The S&P/ASX200 index dropped 2.4 per cent, or 135 points, its biggest fall since May 2012.

“Clearly the news of bank placements is the key driver in the market today,” CMC Markets chief market strategist Michael McCarthy said.

“Any time we get a triple digit fall, it’s not good news for Australian shareholders.”

Coming out of a trading halt imposed on Thursday to undertake a massive capital raising, ANZ shares plummeted $2.44, or 7.5 per cent, to $30.14.

The other banks continued to slide after big losses on Thursday, with Commonwealth Bank down $3.25, or 3.8 per cent, at $81.30, Westpac down $1.09, or 3.3 per cent, at $32.35 and National Australia Bank down 77 cents, or 2.3 per cent, at $32.83.

“A lot of this seems to based around the idea that CBA’s results announcement next week will also include a placement and there appears to be some pre-positioning ahead of that,” Mr McCarthy said.

All sectors of the market dropped.

Taking a big hit was chemicals maker Orica, plunging $3.19, or 16.9 per cent, to $15.64 after downgrading its profit forecast and announcing writedowns of up to $1.65 billion.

Rio Tinto fell but was one of the better performers, following a better than expected half year underlying profit of $US2.9 billion, dropping 28 cents to $53.27.

BHP Billiton shed 76 cents to $25.93 and Fortescue Metals was 3.5 cents weaker at $1.875.

Mr McCarthy said there was hope for a recovery next week, with many major companies reporting earnings.

“We really start the local reporting season in earnest next week, so we’ll certainly have a clearer picture of the current health of the Australian corporate landscape, which might provide some support to share prices,” he said.

KEY FACTS:

* At the close on Friday, the benchmark S&P/ASX200 index was down 135.3 points, or 2.41 per cent, at 5,474.8 points.

* The broader All Ordinaries index was down 127.8 points, or 2.28 per cent, at 5,472.3 points.

* The September share price index futures contract was down 123 points at 5,405 points, with 40,393 contracts traded.

* National turnover was 1.7 billion securities worth $6.2 billion.