Heightened investor fears about global growth have caused the sharpest daily fall on the Australian share market in four months, with energy companies and banks the hardest hit.
Fears that oil prices could fall further from their current 12 year lows added to the market’s misery.
The benchmark S&P/ASX 200 index dropped 2.33 per cent, its biggest fall since late September.
Bell Direct equities analyst Julia Lee said concerns about global growth, which dominated January trading, have returned after a brief respite.
“Essentially what the market has been grappling with is a tug of war between concerns around global growth and central bank support,” she said.
“Over the past week we’ve seen the central bank support wining out, but we’ve gone back to those concerns about global growth.”
The European Central Bank recently hinted at more quantitative easing and the Bank of Japan cut interest rates.
The bulk of the selling on the local market was driven by international investors, which are heavily weighted towards the blue chip stocks in Australia, Ms Bell said.
In the energy sector, Origin Energy was heavily sold off, ending the day down 21 cents at $3.80.
BHP lost more ground amid rising concerns the mining giant will deliver a substantial dividend cut with its interim results on February 23 after ratings agency S&P cut its credit rating, Ms Bell said.
Disappointing profit results from Exxon Mobile and BP overnight also indicates more pain on the horizon in the wake of falling oil prices, she added.
BHP shares fell 65 cents to $14.27, Woodside Petroleum fell $1.35 to $25.65, Rio Tinto lost 51 cents to $37.03, Santos fell 15 cents to $2.77 and Oil Search slipped seven cents to $6.30.
Bank stocks were also heavily sold off amid concerns about their future prospects, mimicking similar falls in banks across Europe and Japan.
National Australia Bank was the biggest faller, down $1.55, or 5.6 per cent, to $26.36 after raising less than expected from the partial initial public offering of its UK subsidiary, Clydesdale Bank.
NAB also delayed the listing of 25 per cent of Clydesdale by 24 hours to update its IPO prospectus after a request for more information from a ratings agency.
Commonwealth Bank was $2.29 lower at $75.73, ANZ fell 73 cents to $23.67 and Westpac dropped 87 cents to $29.43.
KEY FACTS:
* At 1620 AEDT on Wednesday, the benchmark S&P/ASX 200 index was down 116.5 points, or 2.33 per cent, at 4,876.8 points.
* The broader All Ordinaries index was down 113.2 points, or 2.24 per cent, at 4,930.8 points.
* The March share price index futures contract was 125 points lower at 4,817, with 45,150 contracts traded, according to preliminary figures.
* National turnover was 2.06 billion securities traded worth $5.4 billion.
