The Australian sharemarket has plunged more than 5% in early trade after a dramatic night on Wall Street saw one of the biggest daily falls since the middle of the GFC.
At 11:15 AEST the benchmark ASX-S&P 200 index had fallen a staggering 5.22% to 3778.10, with the All Ordinaries Index down 5.32% to 3840.9.
The staggering falls follow yesterday’s drop of almost 3% and mean the Australian sharemarket has now fallen more than 15% in the last week.
The falls in the Australian market have been mirrored across Asian markets including New Zealand, Singapore and Korea, where the market was shut down for five minutes as share prices tanked.
These falls come in the wake of a dramatic night on Wall Street, where the benchmark S&P 500 index plunged 6.7% overnight.
The day of panicked selling also saw the Dow Jones Industrial Average fall more than 5.5%, while the tech-dominated Nasdaq industry also turned in a miserable performance, falling a massive 6.9%.
Last night was the first time US investors had had a chance to trade on the news that the US sovereign debt had lost its coveted AAA status.
US President Barack Obama was forced to appear to try and reassure the market that the US economy remains sound and could recover.
“Markets will rise and fall but this is the United States of America. No matter what some agency may say, we’ve always been and always will be a Triple-A country,” he told reporters.
“In fact, Warren Buffet – who knows a thing or two about good investments – said, ‘If there were a Quadruple-A rating, I’d give the United States that.’”
In the US, financial stocks took the biggest battering, with Bank of America shares down a whopping 20%.
In Australia, the falls have been more broadly based.
The big four major banks all fell by more than 4% in early trade, while AMP shares fell 5.67%.
Woolworths shares fell 4.34% and Telstra shares were down 4%. BHP Billiton shares were down 4.6%.
The biggest falls came from those sectors exposed to the global economy. Agricultural chemicals company Nufarm plunged more than 14%, while miners including Aquila Resources, Linc Energy, Iluka and Murchison Metals all posting double-digit declines.
Ten Network – which counts James Packer, Gina Rinehart and Lachlan Murdoch as shareholders – was also one of the big losers of the morning with its shares down more than 10%.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
