Australian sharemarket drops after US sharemarket tanks amid bad economic data, trade stoush
Close to $75 billion has been wiped from ASX as it dived for the second day straight as fears about the global economy rattle markets worldwide.
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Close to $75 billion has been wiped from the value of Australian shares amid a fresh bout of jitters over the health of the global economy and a looming new front in the US trade war.
The Australian stock market dived for the second straight day today as local investors joined their international counterparts in hitting the sell button.
Blue-chip banks, miners, telcos and retailers were all dumped as fear about the health of the global economy and US plans to hit the European Union with billion in tariffs overtook any boost delivered by this week’s interest rate cut.
The nation’s benchmark share index, the ASX 200, gave up 2.2 per cent on Thursday to close at 6493 points.
The drop wiped $43.8 billion from the value of the index which broadly tracks the value of the nation’s 200 largest listed companies.
It adds to a sharp 1.5 per cent fall posted on Wednesday — erasing $31 billion in shareholder value — and hands investors their biggest back-to-back losses since early August.
The big four banks were all lower on Thursday, with Commonwealth Bank down 2.8 per cent to $77.34, Westpac off 2.4 per cent to $28.50, ANZ dropping 2.7 per cent to $27.30 and National Australia Bank shedding 3.5 per cent to $28.
Among the miners BHP was down 3.2 per cent to $35.15 — its biggest one-day fall since August — while Rio Tinto was off 4.2 per cent to $87.25.
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Telstra fell 3.4 per cent to $3.40, Woolworths was off 2.2 per cent to $36.29 while Coles dropped 2 per cent to $14.94 and Wesfarmers gave up 1.7 per cent to $38.75.
The rout follows Wall Street and stock markets in Asia and Europe also falling sharply over the past two trading sessions.
In the US, the S&P 500 suffered its first back-to-back drops of more than 1 per cent this year.
That was triggered by US manufacturing activity in September tumbling to its lowest level since the global financial crisis and the private sector creating less jobs than economists were expecting.
The updates add to fears that the US-China trade war is increasingly weighing on the world’s biggest economy.
They also came as the World Trade Organization cleared the US to open a new front in its trade tussles with the European Union set to be hit with tariffs.
WTO arbitrators cleared the US to impose $US7.5 billion ($11.2 billion) in tariffs on EU goods in retaliation for European nations providing plane maker Airbus with years of illegal subsidies.
Burman Investment Management portfolio manager Julia Lee Julia Lee said the negative start to October on the Australian share market mirrored last year when global growth jitters stripped 6.1 per cent from the ASX 200 during the month.
“Once again we are seeing those global growth concerns come to the fore,” Ms Lee told Business Daily.
“In truth there are only two things driving global share markets at the moment. One is central banks and their support through lower interest rates and quantitative easing, and the second is the outlook for global growth. Feeding into that is the US-China trade war and now concerns in Europe.”
Australia’s share market closed at an all-time record high of 6845.1 points in late July, finally shaking off its hangover from the global financial crisis.
It has fallen 5.1 per cent since then but remains up 15 per cent for the year to date.
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CONCERNS FOR THE GLOBAL ECONOMY
Wall Street posted its sharpest one-day decline in more than a month after employment and manufacturing updates indicated the US-China trade war is increasingly weighing on the economy.
Adding to concerns about the outlook for global growth, the US also plans to impose tariffs on goods from the European Union including aircraft and agricultural products.
yes Disappointing jobs numbers released added to the gloomy US manufacturing data from Tuesday and compounded market fears about a possible recession.
In London, stocks also tumbled sharply after British Prime Minister Boris Johnson unveiled a new Brexit proposal aimed at removing the need for customs checks at the Irish border.
The benchmark Dow Jones Industrial Average was down 1.9 per cent to 26,079.76, following a decline of 1.3 per cent a day earlier.
The broader S & P 500 retreated 1.8 per cent to 2887.99.
The tech-heavy Nasdaq fell 1.7 per cent lower to 7776.97.
The losses on Tuesday wiped out gains won in the third quarter by the benchmark Dow and the S & P 500.
New York Federal Reserve Bank President John Williams said that trade tensions have created uncertainties, and has impacted investment and raised producer and consumer prices.
“Looking ahead there are a number of cross currents that are leading to slower US growth,” he said at an even in San Diego.
And “there are definitely a lot of uncertainties and risks out there that we need to be navigating.”
A dispute between the US and Europe over aeroplane manufacturers has opened the door for US President Donald Trump to impose new tariffs on European goods.
That would inject even more uncertainty into global markets as the US and China remain locked in a trade dispute.
Mr Trump tweeted that “impeachment nonsense” was what was driving the market down.
All of this impeachment nonsense, which is going nowhere, is driving the Stock Market, and your 401K’s, down. But that is exactly what the Democrats want to do. They are willing to hurt the Country, with only the 2020 Election in mind!
— Donald J. Trump (@realDonaldTrump) October 2, 2019
Recession fears resurged after manufacturing data on Tuesday showed a second straight month of contraction, and was not helped by lower than expected gain in private hiring.
The report from the ADP payrolls services firm showed companies added 135,000 jobs in September but August’s big gain was revised sharply lower.
Chris Low of FTN Financial told AFP the ADP data exacerbated anxieties created by the decade-low in manufacturing activity.
“The weakness in hiring gives further credence to the weakness in yesterday’s ISM report,” he said.
Originally published as Australian sharemarket drops after US sharemarket tanks amid bad economic data, trade stoush