Fears of ‘bear market’ disaster for Australian stock market

THE Australian share market endured a horror morning — with persistent pessimism sparking fears of a “bear market” disaster.

MONEYSAVERHQ .. generic photo of stock market

THE Australian share market endured a horror morning — with persistent pessimism sparking fears of a “bear market” disaster.

A bear market occurs when stock prices fall and negative sentiment in the market becomes self-perpetuating. This causes mass selling of shares, causing further pessimism.

The benchmark S&P/ASX200 index was down 42.6 points, or 0.87 per cent, to 4850.2 points at 12.07 this afternoon, while the broader All Ordinaries index was down 47.2 points, or 0.95 per cent, to 4901.3 points.

This puts Australia right on the edge of entering a bear market, The Australian reports. The ASX200 would need to drop another 64 points to enter a technical bear market, a 20 per cent drop from last April’s high of 5996.

This has been the worst start to a calendar year on record for the ASX, BusinessSpectator reports, with all but one of the trading sessions ending in negative territory.

The March share price index futures contract was down 31 points to 4801 points, with 28,715 contracts traded.

At 12.27pm national turnover was 1 billion securities traded worth $1.8 billion.

Australia’s poor performance follows a global equities sell-off. Japan’s Nikkei index has now entered a bear market, joining the stock markets of Germany and China.

The Australian market clawed back some lost ground from its heavy falls in morning trade but remains deep in the red with losses across the board.

Oil players and miners are among the worst performers, with the energy sector down 2 per cent and materials down more than 3 per cent.

Oil producer Santos led the falls on the ASX200, shedding more than 7.5 per cent while the big four banks were also down.

There was good news, however, for Woolworths, with its stocks surging ahead after it announced it would dump its is loss-marking hardware business Masters.

Woolies’ shares price grew by more than 5 per cent.

Rival Wesfarmers was also up 2.5 per cent on news that its Bunnings business would expand into the UK home improvement market through the takeover of local player Homebase.

Meanwhile, the Australian dollar has fallen close to a seven-year low, after global share prices continued to tumble and oil prices slumped.

The Aussie dollar was trading at 68.69 US cents at noon Monday, down from 69.54 cents on Friday.

Chinese economic data slated for release on Tuesday will take centre stage for traders, with risks to the downside if the gross domestic product, retail sales and industrial production figures disappoint.

— with AAP