Stocks close at 2-month low

The local market has closed at a two-month low, after extending losses in afternoon trade.

Growing concerns about the prospect of an imminent US rate hike have forced the local market to its lowest level in two months, with a 6 per cent decline across the last three weeks wiping out all of 2016’s gains.

At the closing bell, the benchmark S&P/ASX 200 index had sagged 119.6 points, or 2.24 per cent, to 5,219.6, while the broader All Ordinaries index dived 121.4 points, or 2.23 per cent, to 5,319.1.

It saw $34.5 billion in valuation wiped from the local market across the session.

At the head of the falls were the major resources names, although high-yield providers were also in the crosshairs of sellers in an extension of the recent trend away from previously well support dividend plays.

“Today’s sell-off looks to have powerful momentum so might easily have further to go,” CMC Markets chief market analyst Ric Spooner said.

“At the very least this momentum suggests it might be a while before it would be prudent to assume the ASX200 is forming a base. Among other things, the last Fed rate hike triggered concerns about emerging market outflows and this might again trigger wider concerns.

“However, for many sectors in the Australian market, today’s sell-off is a just a continuation of an valuation adjustment that’s been going on for some weeks.”

Among the companies alluded to as struggling for several weeks was shopping centre owner Scentre, which today dipped 2.8 per cent to a new five-month low and is off over 15 per cent from a July peak.

Meanwhile, weakness in base metals and crude at the tail-end of last week weighed heavy on the local resources industry.

Mining giant BHP Billiton skidded 4 per cent to $19.94, its primary rival Rio Tinto lost 2.5 per cent to $47.41 and iron ore miner Fortescue tumbled 5 per cent to $4.70.

In energy, Santos plunged 5.3 per cent to $3.79, Origin surrendered 4.3 per cent to $5.18 and Woodside stumbled 2.6 per cent to $27.57.

The selling was broad-based, however, with just five of the top 200 stocks ending in the black.

The lucky five included Seven West Media, Tatts Group, Syrah Resources, QBE Insurance and Adelaide Brighton.

In finance, the big banks were off between 0.9 per cent and 2.6 per cent, with Commonwealth Bank the leader and NAB the laggard.

The former managed to bounce off a three-year low in late trade, but still is the clear backmarker among the big four this year.

In retail, Coles owner Wesfarmers held up well in edging down just 0.4 per cent, while Woolworths slid 2.3 per cent and Myer also dipped 2.3 per cent.

Among other blue chips, Telstra softened 1.4 per cent to $4.99, while Qantas gave back 1.5 per cent to $3.26.

Elsewhere, Oil Search slipped 2.7 per cent as a board shake-up that included the departure of Ziggy Switkowski was announced, while Elders leapt 5.1 per cent as investors overlooked news of a live export exit and focussed on a positive profit outlook.

The Australian dollar ended the local session at US75.25c, losing more ground against its US counterpart after a miserable Friday with resource-linked currencies out of favour.