The Australian share market has suffered near-across the board losses, with banking and energy stocks weighing heaviest on the indices as wider global uncertainty stifles investor sentiment.
The benchmark S&P/ASX200 index was down 1.17 per cent at 5592.1 points at 1200 AEDT on Tuesday, while the broader All Ordinaries lost 1.19 per cent.
Tech, healthcare, consumer and industrial sectors were also deep in the red following a similarly widespread sell-off on Wall Street overnight. Energy stocks were down nearly two-and-a-half per cent after oil prices fell on US supply concerns and fears over global economic growth.
Caltex recorded the heaviest loss among the major players, down 6.6 per cent to $25.26, after its Lytton refinery performance weighed heavily on its earnings outlook.
Meanwhile, Origin, Woodside, Oil Search, and Santos were down between one and 2.5 per cent.
ANZ lead the losses for the big four lenders, down 2.5 per cent to $23.795, while Commonwealth Bank lost the least, 1.1 per cent lower at $68.52. Macquarie Group fell 2.3 per cent to $110.67.
The gold miners provided rare lustre to the benchmark as the precious metal firmed more than $7 an ounce overnight against a softer US dollar, and held the sector flat with a loss of just 0.03 per cent.
Northern Star was up 5.4 per cent to $8.74, while Newcrest climbed two per cent to $21.27, and Evolution jumped 4.2 per cent to $3.50.
Major miner BHP eked out a 0.2 per cent gain, while Rio Tinto, South32 and Fortescue lost between 0.5 and 1.7 per cent. Bluescope fell 4.4 per cent to $11.45.
A 1.2 per cent loss to healthcare benchmark CSL dragged the sector lower, while telecommunications was the only sector in the black by noon, lifted by a one per cent rise from Telstra and TPG gaining nearly three per cent.
Auto classified site Carsales.com dropped one per cent to $11.63 after announcing a likely $48 million impairment on its share in Stratton Finance.
And dual-listed New Zealand builder Fletcher Building climbed nearly three per cent to $4.715 after announcing the $US840 million sale of the Formica Group to Netherlands-based Broadview Holding.
The Aussie dollar edged higher, buying 71.86 US cents from 71.73 US cents on Monday.
DOW JONES PLUNGES AGAIN
— Marley Jay, AP
Another day of big losses knocked US stocks to their lowest levels in more than a year Monday.
Selling was widespread. Investors dumped high-growth technology and retail companies as well as steadier, high-dividend companies. Hospitals and health insurers slumped after a federal judge in Texas ruled that the 2010 Affordable Care Act is unconstitutional.
The Dow Jones Industrial Average fell 507 points after a 496-point drop Friday, and all the major stock indexes fell at least 2 per cent.
Oil closed below $US50 a barrel for the first time since October 2017. Bonds rose and their yields fell.
Mark Hackett, chief of investment research at Nationwide Investment Management, attributed Monday’s action in stocks to investor concerns about the slowing global economy. But he felt it was overdone.
“That is basically retail investors panicking,” he said. “Investors basically are confusing the idea of a slowdown with a recession.”
Investors sold almost everything. Less than 40 of the 500 stocks comprising the S&P 500 finished the day higher. Amazon led a rout among retailers and tech companies including Microsoft turned sharply lower.
Some of the largest losses went to utilities and real estate companies, which have done better than the rest of the market during the turbulence of the last three months.
The S&P 500 index, the benchmark for many investors and funds, finished at its lowest level since October 9, 2017. It has fallen 13.1 per cent since its last record close on September 20.
The Russell 2000, an index of smaller companies, has dropped more than 20 per cent since the end of August, meaning that index is now in what Wall Street calls a “bear market”.
Germany’s main stock index also fell into a bear market Monday as companies like Siemens and SAP kept falling.
Smaller US stocks have taken dramatic losses as investors have lost confidence in the US economy’s growth prospects. Smaller companies are considered more vulnerable in a downturn than larger companies because they are more dependent on economic growth and tend to have higher levels of debt.
Hackett said the current drop is similar to the market’s big plunge in late 2015 and early 2016, which was also tied to fears that the global economy was weakening in a hurry.
But even though the economy is slowing down after its surge in 2017 and 2018, it should continue to do fairly well.
“It’s a slowdown from extremely high levels to healthy levels,” he said. “The globe isn’t going into a recession.”
The S&P 500 skidded 54.01 points, or 2.1 per cent, at 2,545.94. The Dow Jones Industrial Average lost 507.53 points, or 2.1 per cent, to 23,592.98. The Nasdaq composite fell 156.93 points, or 2.3 per cent, to 6,753.73. The Russell 2000 index dipped 32.97 points, or 2.3 per cent, to 1,378.14.
Following the health care ruling, hospital operator HCA dropped 2.8 per cent to $US123.1 and health insurer UnitedHealth lost 2.6 per cent to $US258.07. Centene, a health insurer that focuses on Medicaid and the Affordable Care Act’s individual health insurance exchanges, fell 4.8 per cent to $US121.42 and Molina skidded 8.9 per cent to $US120.
Many experts expect the ruling will be overturned, but with the markets suffering steep declines in recent months, investors didn’t appear willing to wait and see.
Benchmark US crude fell 2.6 per cent to $US49.88 a barrel in New York. Brent crude, used to price international oils, dipped 1.1 per cent to $US59.61 a barrel in London.
Weaker economic growth would mean less demand for oil, and traders have been concerned there is too much crude supply on the market. That’s chopped oil prices by one-third since early October.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.86 per cent from 2.89 per cent.
The Federal Reserve is expected to raise interest rates again Wednesday, the fourth increase of this year. It’s been raising rates over the last three years, and investors will want to know if the Fed is scaling back its plans for further increases based on the turmoil in the stock market over the last few months and mounting evidence that world economic growth is slowing down.
Hackett, of Nationwide, said investors will be happy if the Fed adjusts its plans and projects fewer increases in interest rates next year. But he said investors might be startled if the Fed decides to not raise rates this week.
British Prime Minister Theresa May said parliament will vote January 14 on her deal setting terms for Britain’s departure from the European Union. She cancelled a vote on the deal last week because it was clear legislators were going to reject it.
May insists she can save the deal, but pressure is mounting for either a vote by politicians or a new referendum on the issue.
Britain is scheduled to leave the EU in late March, and if it does so without a deal in place governing its trade and economic relationships with the bloc, it could bring huge disruptions to the British and European economies and financial markets.
Germany’s DAX lost 0.9 per cent. That means the DAX, which represents Europe’s largest single economy, is also in a bear market. France’s CAC 40 and Britain’s FTSE 100 both fell 1.1 per cent.
Japan’s Nikkei 225 index added 0.6 per cent and the Kospi in South Korea gained 0.1 per cent. Hong Kong’s Hang Seng was less than 0.1 per cent lower. Both the Kospi and Hang Seng are in bear markets as well.
In other energy trading, wholesale gasoline shed 1.7 per cent to $US1.41 a gallon and heating oil slid 1 per cent to $US1.83 a gallon. Natural gas dropped 7.8 per cent to $US3.53 per 1,000 cubic feet.
Gold rose 0.8 per cent to $US1251.80 an ounce. Silver added 0.8 per cent to $US14.76 an ounce. Copper dipped 0.3 per cent to $US2.75 a pound.
The dollar slipped to 112.75 yen from 113.29 yen. The euro rose to $US1.1350 from $US1.1303. The British pound rose to $US1.2629 from $US1.2579.