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Posted: Feb 6 2018, 12:56 PM
Group: Featured Blogers
Member No.: 17
Joined: 17-January 12
Rep: 143 pts
ASX: $60 billion wiped off Australian share market
By business reporter David Chau
Photo: Australian shares continued to tumble following a vicious sell-off on Wall Street overnight. (Dean Lewins, file photo: AAP)
The Australian share market's losses have slightly deepened to about $60 billion.
After the Dow Jones suffered its biggest points drop in a single day (1,175 points), it was almost certain that the local bourse would open sharply lower.
The benchmark ASX 200 index was down 3.1 per cent to 5,839 points (at 1:20pm AEDT), with almost every stock posting losses.
The broader All Ordinaries index dropped by 3.1 per cent to 5,938.
This is a continuation of yesterday's steep losses, when the Australian share market plunged by $30 billion.
So far, the local stock market has fallen by about $90 billion in two days, and has fallen by 3.7 per cent since the year began.
Which stocks were hit hardest?
Every sector on the ASX 200 has been impacted, with the worst performers being technology (down 4.2 per cent), energy (-3.8 per cent) and healthcare (-3.7 per cent).
The sector with the least losses was materials, down by 2.2 per cent.
The energy sector's big names have fallen sharply, with Origin Energy, Santos and Woodside Petroleum down by 5.1, 4.4 and 3.9 per cent respectively.
BHP and Rio Tinto are the biggest drags on the mining sector, falling by 3 and 1 per cent.
All the big four banks are being sold off — Commonwealth Bank (-2.7 per cent), Westpac (-3.2 per cent), NAB (-2.5 per cent) and ANZ (-3 per cent).
The Australian dollar has fallen to 78.75 US cents.
For more updates, you can follow the ABC's live blog on the Australian stock market today.
Retail and trade disappoint
On top of the downbeat day for stocks, the Bureau of Statistics released some disappointing retails sales and international trade figures.
Retail sales fell 0.5 per cent in December, which was fell below market expectations.
Reuters-polled economists were expecting a smaller drop of 0.2 per cent.
In comparison, the November retail sales lifted 1.2 per cent due to the one-off impact of Black Friday sales and release of the new iPhone X.
After such strong pre-Christmas sales, economists were widely expecting December sales to slip.
"A 0.5 per cent fall isn't too bad and the average [monthly] change for November and December is 0.4 per cent," said Capital Economics' Paul Dales.
"That’s not great, but it is better than the average change of 0 per cent in the previous five months."
As for Australia's international trade position, it plunged to a $1.4 billion deficit in December, when economists were expecting a $200 million surplus.
The trade surplus was a rosier $36 million in November.
The deterioration of the trade balance in December was largely due to 6 per cent jump in import values (over the last month).
Exports also increased, but by a less-than-anticipated 1.6 per cent.
"From a real GDP perspective, the fact that the trade balance has deteriorated in the face of rallying commodity prices suggests that net export volumes have been weaker than we had anticipated," said JP Morgan's Tom Kennedy.
One analyst suggeted that the fall in the Dow Jones was linked to recent interest rate increases in the US. He pointed out that investors were switching from shares to interest earning deposits.
Unfortunately for self-funded retirees in Australia, falls on the stock market has an adverse effect on investments. With interest rates still at a near all-time low, the Australian retirees have little options to protect their retirement nest-eggs.
"A lie gets halfway around the world before the truth has a chance to get its pants on." - Winston Churchill