February 28, 2020 10:44:26
Australia’s share market has joined Wall Street in a correction, as the major local stock indices smash through 10 per cent of losses since their recent record highs.
The benchmark Australian ASX 200 share index was down 3.25 per cent at the openAustralian shares gone from record highs to a 10 per cent “correction” in the space of just a weekThe value of listed companies in Australia has lost more than $240 billion from their record highs last Thursday
In the space of just a week, the ASX 200 has gone from a record closing high of 7,162 last Thursday to 6,441 by 10:10am (AEDT), once the market had fully opened.
This morning’s initial 3.25 per cent slump took the losses above 10 per cent since that record, marking the beginning of what traders call a “correction”. To enter a share market “crash” most analysts consider that the share market would need to lose another 10 per cent from there.
Looking at the broader market, represented by the All Ordinaries index, Australian shares have lost more than $240 billion in value since their highs last week.
All sectors of the market are in the red, with the major miners down 3.4-5.4 per cent and the big banks off 2.9 to 3.8 per cent.
The hardest hit companies in the top 200 during early trade were Avita Medical, down 9.9 per cent, Afterpay (-8.2 per cent) and Harvey Norman (-8.1 per cent).
The only company in the top 200 that was ahead, albeit only slightly, was Treasury Wine Estates — it was 0.6 per cent higher, having been sold-off heavily over the past month.
Wall Street’s main indexes plunged more than 4 per cent overnight, pushing the slide from last week’s peak to more than 12 per cent and confirming US shares are deep into a correction and potentially heading for a bear market.
Global shares are now at a four-month low, having retreated from record highs at a rapid pace.
The indexes have been hit by their steepest weekly pullback since the 2008 global financial crisis, as new coronavirus infections reported around the world surpassed those in mainland China.
“Stocks and bonds say we’re doomed,” Chris Rupkey, the chief financial economist for MUFG Union Bank, told Bloomberg.
“Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down.”
US traders were particularly rattled by the Centres for Disease Control and Prevention confirming a COVID-19 infection in California in a person who apparently had no relevant travel history or exposure to another known patient.
“It’s not a China thing, it’s becoming more global … in terms of the spread of the virus and its economic impact,” said Willie Delwiche, investment strategist at Robert W Baird in Milwaukee.
“There’s a lot of uncertainty right now about where that impact lands … it’s also possible that forecasts are over-reacting to the downside.”
By the close, both the S&P 500 and Dow Jones Industrial Average had slumped 4.4 per cent, while the tech-heavy Nasdaq fell even further, plunging by 4.6 per cent.
European markets had also dropped sharply earlier in the session, with the EuroStoxx 50 off 3.4 per cent and London’s FTSE 100 down 3.5 per cent.
The Australian dollar remains surprisingly resilient given the global share market panic, holding firm at 65.77 US cents.
February 28, 2020 10:21:08