Australian sharemarket loses $40bn in final session of 2019

Australian shares closed the final session of the decade down $40bn in value on Tuesday.

For December, the ASX 200 lost 161.8 points, or 2.36 per cent, in just its third losing month for the year. Picture: AAP

The Australian share market has finished 2019 with a sharp loss that wiped out $40bn in value as traders took some of the year’s phenomenal profits off the table.

The benchmark S&P/ASX 200 index closed on Tuesday down 120.8 points, or 1.78 per cent, to 6684.1 points, with the broader All Ordinaries down 119.2 points, or 1.72 per cent, to 6802.4 points.

But investors can thank central bank interest rate cuts for an exceptionally good year in Australian financial markets.

Spurred on by surging global markets, three interest rate cuts from the Reserve Bank and its guidance for an extended period of low interest rates and possibly lower rates and quantitative easing as it pursues full employment and higher inflation, Australia’s S&P/ASX 200 share index finished 2019 up 1037.7 points — an 18.38 per cent gain — for its best year since its 30.9 per cent climb in 2009.

Even as earnings estimates retreated after the worst economic growth since the global financial crisis – following China’s deleveraging campaign, hostile US trade policy and Australia’s housing downturn and crippling drought – the Australian shares index had its best year in a decade.

The market closed early at 2.10pm (AEDT) and will resume trade on Thursday after breaking for New Year’s Day.

The ASX had been tipped to close out the year with another weak session as Wall Street continues to pull back from record highs amid thin holiday trade.

The Australian sharemarket began the week on track for a 20 per cent gain this year – its biggest rise since 2009.

“Not a very good day, it was just indiscriminate selling, pure profit taking,” said Bell Direct market analyst Jessica Amir.

“But zooming out, it’s still our best annual gain in 10 years,” Ms Amir noted.

For December, the ASX 200 lost 161.8 points, or 2.36 per cent, in just its third losing month for the year.

It was flat for the quarter, with a 4.2 point loss.

“It’s amazing, all the risks I was talking about, and here we are sitting just off all-time highs,” said IC Markets general manager Nick Twidale, who had a similar view on Tuesday’s losses.

“For today, it’s just a bit of profit taking into the new year, but all the fundamentals are locked in for a strong start to the new year.”

Every sector suffered losses of at least a percentage point on Tuesday, with telecom and tech stocks hit the worst as both sectors dropped 3 per cent.

Telstra dropped 2.8 per cent to $3.54, Afterpay was down 2.8 per cent to $29.28 and WiseTech Global dropped 5.5 per cent to $23.37.

Supermarket giant Woolworths dropped 3.4 per cent to $36.16, while Coles fell 3.3 per cent to $14.84.

In healthcare, blood products giant CSL fell 2.2 per cent to $275.76, while Sonic Healthcare, Ramsay Health Care and Cochlear all dropped between 2.5 and 3.5 per cent.

Mining suffered the least losses, with the sector down 1.1 per cent – buoyed by goldminers, the only group to rise.

Newcrest gained 0.6 per cent, Evolution was up 2.4 per cent and Northern Star rose 1.3 per cent.

But elsewhere in the sector, BHP was down 1.3 per cent to $38.92, Rio Tinto fell 1.2 per cent to $100.40 and Fortescue Metals dropped 1.8 per cent to $10.69.

The financial sector suffered the second-least losses, down 1.3 per cent, as Commonwealth Bank dropped 1.5 per cent to $79.90, NAB tumbled 1.0 per cent to $24.63 and Westpac and ANZ both dropped 0.7 per cent, to $24.23 and $24.63, respectively.

For the year, Avita Medical posted the biggest gains, posting a massive 696 per cent rise after its spray-on burn treatment was approved for use in the US.

Fellow biotech stock Polynovo – which also makes treatment for burns – was the second-biggest ASX 200 gainer, up 231 per cent, followed by prepaid card company EML Payments, which climbed 208 per cent.

The Aussie dollar is buying US70.02c, 0.11 per cent stronger against the US dollar, having moved within touching distance of a new five-month high overnight.

Additional reporting: AAP