With a near 25% plunge in the value of the huge AMP wealth management company leading the way, Australian shares crashed into correction territory and wiped out all the gains of the past year to be down 6.6% for 2018 so far.
The ASX 200 hit a 12-month low, closing at 5,664.10, down 164.90 points or 2.83%. That wiped $49 billion from the value of the index.
And it was a similar story elsewhere in Asia with the region as a whole falling into a bear market with the drop 20% or more from the peak in January – leading the way the Chinese markets which are off close to 23%.
It was the ASX 200’s worst performance since February – the market steadied after those falls and then rose, but with tech stock valuations – especially those of the megatechs no suspect many analysts say a rebound will be difficult.
And any sustained recovery will depend on investors regaining confidence and that has been hit by the Trump trade war with China, China’s softening pace of activity, rising US interest rates, the growing tensions in the EU as Italy goes its own way (and sees its credit standing downgraded), and those fears about the value of big tech stocks like Apple, Netflix, Alphabet, Amazon and Facebook.
Fears about the values of those and other tech stocks (such as chipmakers) saw Wall Street suffer large falls on Wednesday. The Nasdaq fell 4.4% entering correction territory, the Dow lost 2.4% and the S&P 500 index slumped 3.1%.
The material sector took a big hit on Thursday despite a strong lift in iron ore prices in China as they topped $US74 a tonne, the highest level since the start of this year. But base metals fell across the board and oil prices edged higher, but then weakened.
BHP led the market lower, falling 4% to $30.80. Rio Tinto lost 4.5% hit to $73.52, South32 slid 3.6% to $3.52, Fortescue Metals dropped 5.7% to $3.64 and Whitehaven Coal gave up nearly 7% $4.86.
The major banks were not spared – the Commonwealth Bank fell 2.4% to $65.27, Westpac slid 2.5% to $25.84, NAB fell 2.5% to $24.53 and ANZ closed at $24.80, down 2.6%.
Macquarie Group shares dropped 3.2% to $110.13, while the AMP plunged 24.5% to $2.50 after it investors rejected its supposed $3.3 billion sale of its life insurance business to UK asset buyer, Resolution Life.
Among retailers, Super Retail fell 10.2% to $7.48, Harvey Norman $5% to $3.16 and Myer 3% to $0.475. Woolies shares eased 0.9% to $27.55.
CSL resumed losing ground after four up sessions – the shares fell 4.1% to $174.69. CSL shares are down 13% in the last month and 25% from the most recent peak firmly in the company of bears….growllllll.
Bellamy’s Australia slipped further on Thursday after brokers weighed in on the company’s recent trading update. It closed the session at $7.50, down 6%, extending its losses from Wednesday
Lynas was the index’s best performer, up 7.3% to $1.70 on a better than expected quarterly update showing the company’s cash flow had improved.
Cleanaway Waste Management shares rose 5% to $1.77 after it reaffirmed its 2019 guidance. JB Hi-Fi did that, but the shares lost 2.9% to $22.88 and Qantas reported better than expected bookings and first half revenue growth and shares slid 4.6% to $5.36.
Local tech stocks were hit – Atlassian shares fell more than 7% in the US on Wednesday. Afterpay Touch shares fell 4.4% here yesterday, Wisetech Global shares were off 2.9% and shares in Appen dropped 3.2%. ResMed shares fell 2.5% in Australia. News Corp shares lost 2%. Fairfax Media shares fell more than 5% to 64 cents and Nine Entertainment shares lost 4% to $1.74. Seven West Media shares dipped 4% to 82 cents and are down 18% in the past month.
