Sharemarkets on both sides of the globe have taken a beating in the last 12 hours, with the Australian market falling to a five-year-low and the US market plunging to a 12-year low.
Australia’s benchmark S&P/ASX200 index dropped 2.5% in early trade, after a shocking night on Wall Street, which plunged more than 4% on news that insurance group AIG has recorded multi-billion dollar losses.
The S&P/ASX200 index recovered slightly as the morning went on and was down 45.2 points or 1.39% to 3204.1 at 12.10 AESDT.
BHP Billiton lost 3.2% to $27.05, while Commonwealth Bank dropped 3.1% to $27.64. Westpac also lost 2% to $15.97 while AMP fell 4.5% to $4.25.
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Overseas, Wall Street dropped to its lowest point in 12 years. The Dow Jones Industrial Average finished the day under 7000 for the first time since May 2007, closing down 299.64 points or 4.24% to 6763.29. Oil prices also fell back 4% to $US40 a barrel.
The market was shocked by news that insurance group AIG has posted the biggest loss in American corporate history at a massive $US61.7 billion. The group will also receive up to $US30 billion from the US Government, following $US150 billion in payments made last year.
European stocks also suffered a massive decline, with the FTSEurofirst 300 index falling 4.9% to a six-year low of 683.84.
Retail sales up
News from the retail sector is slightly more optimistic, with figures from the Australian Bureau of Statistics showing retail turnover increased by a seasonally adjusted 0.2% in January.
The small increase follows a 3.8% rise in December and 0.4% in November.
Food retailing recorded the biggest increase of 1.5%, followed by clothing and soft goods at 0.8% and “other retailing” at 0.2%. Household goods retailing suffered the largest decline at 4%.
More job cuts
Meanwhile, more job losses have been announced in the mining sector as Anglo American says it will slash 10% of its Australian workforce to reduce costs by one-fifth.
A total of 650 workers and contractors will be eliminated from its workforce, while chief executive Seamus French says the company has tried to redeploy employees if possible.