Close The sharemarket took investors on another roller-coaster ride today, but in the end stocks closed 1.5 per cent lower, falling to a fresh 26-month low and wiping another $18 billion off the market's value.
At the close, the benchmark S&P/ASX200 was down 61.7 points, or 1.6 per cent, at 3903.2, while the broader All Ordinaries index slid 66.2 points, or 1.6 per cent, to 3978.5.
In a dismal week for investors, the All Ords fell nearly 6 per cent and lost more than $70 billion in value. The index is more than 22 per cent off its mid-April high of the year, placing it firmly in bear-market territory.
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The Australian dollar took another heavy hit amid the global flight from risk, falling as low as 96.92 US cents after plunging 3 per cent on Thursday. That was the biggest daily loss since May 2010 when similar fears about global growth gripped markets. The dollar recovered slightly in late trade to buy 98.33 US cents.
World markets have been plunging on growing fears the global economy is headed for another slump, and concerns policymakers may be ill-equipped to prevent it.
The latest slide was sparked Thursday morning by the US Federal Reserve’s downgrading of its outlook for the US economy. Downbeat economic data from China and the euro-zone also weighed on global market sentiment.
Brief recovery
During today's session, the market reversed its losses after the G20 released a statement pledging support for the global economy, but the optimism soon faded and shares slipped back into the red.
‘‘Verbal support without any concrete action is no longer convincing,’’ said Joe Lau, an economist at Societe Generale in Hong Kong. ‘‘Investors are now looking for viable credible actions from policy makers and, given the amount of nervousness and uncertainty out there, that may not even be enough.’’
Markets in the region also posted heavy losses, with shares in Seoul slumping 5.7 per cent, Taiwan stocks sliding 3.55 per cent and Thailand down 4 per cent. China shares, however, trimmed losses to close just 0.4 per cent lower.
But in a sign the worst of the carnage may be over, European shares rebounded in early trade, buoyed by the G20 pledge.
Miners lead losses
Verbal support without any concrete action is no longer convincing.
The local market's losses were led by the materials sector, down 3.5 per cent, while energy lost 2.8 per cent and financials shed 0.8 per cent. Health care was the only sector to post a gain, rising 0.3 per cent.
RBS Morgans private client adviser Craig Walker said a media report flagging iron ore price falls in coming years amid growing supply put the brakes on miners such as Fortescue and Rio Tinto.
‘‘In this type of market ... negative news tends to snowball,’’ Mr Walker said.
Mr Walker said the market finish in Australia was a fairly reasonable result, given Wall Street’s Dow Jones Industrial Average closed 3.5 per cent weaker overnight.
He said reasonable performances by financial stocks were more than offset by weakness in the mining sector.
Commodity prices including gold slumped overnight and extended losses today.
Heavyweight miner BHP Billiton was down $1.08, or 3 per cent, at $34.55 while Rio Tinto was down $2.45, or 3.8 per cent, at $62.65. Fortescue slumped 51 cents, or 9.3 per cent, to $4.95 and Atlas Iron backtracked 26 cents, or 7.9 per cent, to $3.04.
Commonwealth Bank was the only big bank to gain ground, up 40 cents at $43.33. Westpac was 19 cents weaker at $18.73, ANZ was down 23 cents at $18.75 and National Australia Bank was down 51 cents, or 2.37 per cent, at $21.01.
Department store chain Myer was one of the few stocks in the green, putting on two cents to $2.12.
Trading volumes were high, with 2.6 billion shares worth $7.08 billion changing hands.
The US futures market was up by 40 points, tempering expectations of a major recovery on Wall Street overnight.
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AAP, Reuters, with BusinessDay