ASX falls 7.3pc in worst session since GFC, sheds $136 billion

That is all from us today. We'll be back tomorrow morning. Germany's current accounts come out at 6pm tonight and we will get China's inflation data along with domestic business confidence numbers on Tuesday morning.

Good night.

In the worst one-day sessions since the global financial crisis, the S&P/ASX declined by 455 points to 5760.6 on Monday, a decline of 7.3 per cent. This is equal to $136.5 billion being wiped from the index's $1.87 trillion value.

At the end of the day 173 companies were lower while only three were higher - Fisher & Paykal Healthcare, Newcrest Mining, and Spark Infrastructure.

The energy sector declined by 20 per cent and took away 57 points. But the financials sector had the biggest impact with a fall of 7.6 per cent, which took away 137 points.

Oil stocks were up for sale as the oil price dropped more than 20 per cent. Oil Search shares declined 35 per cent in one day to $3.30, Santos dropped 27 per cent to $4.89, and NRW Holdings (an mining services company) fell nearly 20 per cent to $1.75.

The banks were badly hit with Westpac closing under $20 at $19.52, the lowest price since mid-2009. National Australia Bank shares fell by $1.86 or 8.5 per cent to $20.14, the lowest price since 2009.

Westpac Bank is now forecasting the Australian economy will fall into recession for the first time in nearly 30 years.

“On a quarterly basis we expect the economy will contract in both the first and second quarters by 0.3 per cent and 0.3 per cent respectively to be followed by a rebound of 1.4 per cent and 0.8 per cent respectively in the third and fourth quarters,” Westpac chief economist Bill Evans wrote.

“That growth profile constitutes a technical recession but given the expected recovery in the second half of the year it is much more realistic to characterise the situation as a ‘major disruption’ to growth rather than the style of recession that Australia has experienced in the past.”

Mr Evans said the expected rebound in the economy in the second half of the year should prevent unemployment spiking into double-digit territory, an outcome that would lead to increased financial stability risks associated with the housing market.

“In Australia’s last two recessions the unemployment rate lifted from 6 per cent to around 11 per cent,” he said. “We expect the unemployment rate to hold below 6 per cent through this period.”

Gold is peaking at record highs in Australian dollars as we near the end of this horror session. Gold reached $2645.57 per ounce earlier today and is currently around $2545.

The S&P/ASX 200 is down by 6.8 per cent at 5821 and futures are pointing to sharp declines in overseas markets tonight.

Not sure if Facebook will be very worried, but Australia's information commissioner has launched legal action against to company, accusing the social media giant of "serious and/or repeated interferences" with user privacy in breach of the law.

The Federal Court action follows a lengthy investigation into the Cambridge Analytica scandal of 2018, which saw millions of users' data inappropriately accessed by the now defunct data science firm.

The information commissioner has alleged the personal information of Australian Facebook users was disclosed for purposes other than that for which it was collected - a breach of Australia's Privacy Act.

"All entities operating in Australia must be transparent and accountable in the way they handle personal information, in accordance with their obligations under Australian privacy law," Australian information commissioner Angelene Falk said.

Read the full story here

The fall in WTI crude futures is now the largest daily percentage decline on record, exceeding the drop recorded during the first Gulf War in 1991.

Front-month WTI futures are currently down 33.1 per cent to $US27.60 per barrel.

The US benchmark price now sits less than $1.50 away from breaking below the levels hit in early 2016. Should the contract break below $US26.05 per barrel, it will hit levels not seen since May 2003.

Fund managers admit there was a sense of fear and panic when Australian markets opened this morning and were among the first in the world to absorb the shocking fall in oil prices.

“There was a sense of panic given movements in the Aussie dollar, US stock futures and bond markets,” said Con Michalakis, chief investment officer at Statewide Super. “There was some real fear in the markets this morning.”

While it’s difficult to predict whether there’ll be a specific catalyst to help stabilise markets, he believes there will be a big fiscal stimulus response to help support economic conditions.

While it may prove to be difficult, Mr Michalakis said it’s important that younger investors stick to their long-term strategy.

“Everyone is getting hit in this market, and everyone react to that differently,” he said.

“For those who are younger, less than 50 years old, they’ve already seen the GFC and the European debt crisis. Just stick to the long-term, commit to your super and stay well diversified.”

For older Australians, he admitted its “gets a bit harder with interest rates collapsing”.
“There’s no income out there,” he said.

Following the recent market rout, Mr Michalakis said he is now evaluating when would be the appropriate time to start buying back in.

“We haven’t been doing any selling and we haven’t been doing any buying, but what we’re looking at with these lower levels is when do we start rebalancing our portfolios?” he said.

“Once we hit our lower exposures we’ll be slowly topping up into this market. That could even be sometime this week with the markets falling.”

The 19 per cent decline in the energy sector today represents a $17 billion decline in the market capitalisation to $71.2 billon.

In late January the energy sector had a market capitalisation of $118 billion but the sell-off means in just seven weeks the sector's value has dropped by nearly $47 billion.

Santos shares are down 27 per cent today to $4.90, representing a $3.8 billion decline in the company's value. Woodside Petroluem sheares are down 17.2 per cent and the company's market capitalisation has dropped $4.3 billion in a single day to be near $20 billion. This effectively wipes away four years of growth.

The IT sector was one of the big risers last year as stocks priced for future growth kept on rising. However, with global growth forecasts being quickly downgraded, this sector has dropped 28.9 per cent since a high in February.

Among the big falls today is a 14.7 per cent fall in Afterpay to $28.09, a 12.8 per cent drop in nearmap to $1.32, compared to a high of $4.23 six months ago.

EML Payments, Computershare, and WiseTech are all down about 10 per cent, and Appen is down 9 per cent to $19.13.

The heaviest stock in the index, Xero, is down 4.7 per cent to $71.62. It has outperformed the index in the past month by falling only -19 per cent since February.

Meanwhile futures are pointing to a decline of about 4.8 per cent on the NASDAQ tonight.

Webjet shares are down 13.4 per cent today to $7.05, well off the highs of $17.19 reached ten months ago. Flight Centre shares are down 6.2 per cent to $24.90 and hit a one-year low of $23.79 today.

Meanwhile Corporate Travel is down 11.4 per cent to $9.57, and has dropped 53 per cent since the start of the year.

Qantas shares are down 8.5 per cent today to $4.26, the lowest price since May 2017.

Qantas' market capitalisation has shrunk from $11 billion around Christmas-time to $6.3 billion today.