Resources sector drop plunges ASX to lowest level in two years, shaving $60b

IT WAS a horror day on the Australian share market with levels dropping to their lowest in two years.

THE Australian share market has plunged well over three per cent, pulled down mainly by a big sell-off of resources stocks, especially global miner BHP Billiton.

It was the market’s hardest fall in a month. Both market indices dropped below 5,000 points, an important psychological support level.

The sell-off stripped around $60 billion in value from the market.

OptionsXpress market analyst Ben Le Brun said the local bourse was an absolute bloodbath on Tuesday, with selling across all sectors.

“Resources have led the way down on renewed concerns about China,” Mr Le Brun said.

“We had Glencore Xstrata down by almost a third last night (in London). That just added to the very negative sentiment out there in the world of commodities.” US and European markets retreated overnight on deepened worries about China’s economy, after poor Chinese industrial profits data hit prices of key commodities such as oil and copper.

On the London exchange, shares in Swiss-based mining giant Glencore Xstrata fell more than 30 per cent.

On Asian markets on Tuesday, resources firms were at the forefront of a general sell-off as investors also fretted over the impact of China’s slowing growth.

On the local bourse, in the resources sector, BHP Billiton retreated $1.54, or 6.65 per cent, to $21.61, Rio Tinto descended $2.23, or 4.57 per cent, to $46.52, and Fortescue Metals sagged 11.5 cents, or 6.44 per cent, to $1.67.

Oil and gas producer Woodside Petroleum surrendered $1.74 to $28.17, and Santos was off 43 cents at $4.28.

Among the major banks, Commonwealth Bank lost $2.55 to $70.15, Westpac dumped $1.14 at $29.10, National Australia Bank fell $1.10 to $29.20, and ANZ dropped $1.02 to $26.38.

Outdoor adventure gear retailer Kathmandu rose three cents to $1.30 despite its full year profit plummeting 51.7 per cent.

KEY FACTS

* On Tuesday, the benchmark S&P/ASX200 index was down 195.1 points, or 3.82 per cent, at 4,918.4 points.

* The broader All Ordinaries index was down 187 points, or 3.63 per cent, at 4,958.1 points.

* The December share price index futures contract was down 222 points to 4,884 points, with 45,712 contracts traded.

* The price of gold in Sydney at 1700 AEST was $US1,127.30 per fine ounce, down $US9.60 on Monday’s price of $US1,136.90.

* National turnover was 2.2 billion securities worth $6.1 billion.