The plunge in US stocks has infected Australian shares, with the local bourse opening sharply lower in a “bloodbath” after the Dow industrials hit its biggest one-day decline in history.
The local benchmark S&P/ASX200 index was down 2.7 per cent at 5,861.1 points after the first half-hour of trade on Tuesday, with all sectors weaker.
Charles Schwab market analyst Ben Le Brun said there was not even one stock on the Australian share market that opened stronger in the early stages of trading, following Wall Street’s slump.
“It is an actual bloodbath,” Le Brun said.
“Wall Street has had an appetite for stocks for years on end so it has just been going up in steps and now we are looking at nothing more than a pull-back.
“So, of course, there is fallout here in Australia.”
In the US, the benchmark S&P 500 and the Dow Jones Industrial Average suffered their biggest percentage drops since August 2011 as investors grappled with rising bond yields and potentially firming inflation.
The financial, healthcare and industrial sectors fell the most, but declines were spread broadly as all major 11 S&P groups dropped at least 1.7 per cent and all 30 of the blue-chip Dow industrial components finished negative.
At Wall Street’s close, the Dow was down 4.60 per cent at 24,345.75, the S&P 500 had lost 4.10 per cent to 2,648.94 and the Nasdaq Composite had dropped 3.78 per cent to 6,967.53.
Le Brun thought it unlikely that Australian shares would return to positive territory but said local stocks could regain some ground if US futures indicated a positive turn on Tuesday afternoon.
The Dow futures was up 181 points, or 0.8 per cent, at 24,119 points at 1030 AEDT.
Locally, the big four banks were all sharply lower with Westpac the worst off – down three per cent to $30.38 – and its peers around 2.5 per cent lower.
Macquarie Group’s shares fell 4.6 per cent to $98.60 after announcing it expects to lift full-year profit by about 10 per cent on last year’s record $2.2 billion.
Energy stocks opened weaker after oil prices traded lower as rising US output, a weaker physical market and recent US dollar strength added to the pressure from a widespread decline across equities and commodities markets.
Woodside Petroleum, Oil Search, and Santos were trading down between 3.9 per cent and 4.8 per cent.
Mining shares have also suffered with BHP Billiton, Rio Tinto and Fortescue Metals between 1.4 per cent and 2.7 per cent weaker.
Pilbara Mining was one of the worst-off individual stocks, falling seven per cent to 80 cents, while WiseTech global suffered a 7.1 per cent decline to $14.46.
Shares in Magellan Financial Group sank 6.5 per cent to $25.18 after the fund manager lifted first-half underlying profit 25 per cent to $109.2 million but said statutory net profit fell 38.6 per cent to $53.6 million because of costs associated with the ASX float of Magellan Global Trust.
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