- The Australian market was dragged down by big falls on Wall Street.
- The ASX200 fell below 6000 points and kept going to close down 2.7%, amid a bloodbath for equity markets across Asia.
- Hardest hit were the major banks, the big miners and tech stocks.
- Losses accelerated into the afternoon session.
The ASX was hit by a monster wave from Wall Street, sending the major banks, the big miners and tech stocks into a steep slide and dragging the ASX200 index below the key 6,000 point mark.
Wall Street slumped in overnight trade with the S&P500 index dropping 3.3%, the Dow 3.2% and the tech-heavy Nasdaq index 4.1%.
Share markets across Asia were smashed as the sell-off spilled over into the new trading day. There has been no clear trigger for the sell-off but markets have been concerned about about higher longer-term bond yields smothering economic activity and profits, and about the US-China trade war.
In Australia, the ASX200 fell hard, dropping 2% in early trade and then lost more ground in the afternoon. At the close, it was at 5,883.80, down 166.00 points or 2.74%.
Macquarie fell 6% to $115.49, the ANZ 3.2% to $26.01, the NAB 2.5% to $26.00, Westpac 2.5% to $26.29 and the Commonwealth Bank 2.8% to $67.00, a five-year low.
The big miners were deeply in the red. BHP was down 3.8% to $33.40 and Rio Tinto fell 3.2% to $76.61.
Pure-play iron ore miner Fortescue Metals went against the trend, gaining 2.4% to close at $3.76, after announcing a $500 million buyback.
Information technology shares were down more than 4% as a group. Xero dropped 6.2%% to $42.52 and Wisetech Global 10.4% to $16.43.
Afterpay — which plays as a tech stock and in the retail sector — was down 11% to $13.76.
Among media companies, Nine was down 3.2% at $2.10 and Seven West Media 2.6% top $0.94.
Chris Weston, Head of Research at Pepperstone Group, says volatility has made a comeback in a big way, and it has seemingly come out of nowhere and hit traders square in the chops.
"The biggest issue being asked on the floors today is what exactly caused the sell-down," he says.
"The fact that there is no one smoking gun breeds uncertainty, as the market craves to understand what is the trigger mechanism so they can understand what could be the circuit breaker to gain confidence to buy the dip — which is what everyone is programmed to do these days."
Rakuten Securities says a number of factors came together at the same time.
"The US-China trade situation is certainly nothing new and although the Chinese stance does seem to have stepped up slightly in the last week or so, there has been no dramatic change overnight," says Nick Twidale, the Rakuten Securities Australia COO.
"Also the US yield story has been a factor in the markets for the last few weeks, really since the last Fed meeting and the run up to it, so overall it doesn’t feel like anyone is hitting the panic button just yet."
"But if we do get a few more sessions like last night, then investors may be looking for further downside in the short to medium term and it could be a quick move."
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