Australian Treasurer Joe Hockey stated that although markets would stay risky for some time, the worldwide financial system’s fundamentals remained pretty robust.
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“If that takes hold amid an environment where the central banks have no more bullets in the gun, then seemingly insane predictions like the Dow Jones at 5,000 might not seem so insane after all”, he warned.
The Australian bond market is higher, taking cues from US treasuries that rose following local stock market pain.
“At this point, the future is pointing to a decline of 110 points or 2.2 per cent“, he said on 3AW Breakfast.
The Australian share market has suffered its worst one-day fall in four years, shedding more than 4 per cent and $64 billion in value after Chinese stocks plunged again. “I think there is a recognition that they need to stimulate the economy and that will flow through to steel demand”. “However, the ongoing sell off in commodities and concerns about growth in China have more people thinking in terms of global deflationary pressure”.
The Australian sharemarket dove sharply today, as predicted, closing at a 25-month low amid the global equities sell-off sparked by growing concerns about the strength of China’s once irrepressible economy.
IG Group markets analyst Angus Nicholson told the Herald Sun that the session was one of the market’s worst in five years, but said he was still hopeful.
“The market is going to drop further”.
Among the major banks, Commonwealth Bank fell $3.12 to $72.47, ANZ dropped $1.43 to $26.91, National Australia Bank reversed $1.45 to $29.71, and Westpac retreated $1.92 to $29.45.
“There are clearly risks, but the data indicates that US and European economies continue to recover; lower oil prices will serve to boost consumer and business spending; and Chinese authorities are trying a range a measures to maintain momentum in their economy”. “Investors don’t like uncertainty, but we still believe this is the pause that refreshes, that basically these declines were really needed because some of the markets were getting a little bit overvalued”, Mr James said.
BHP was slashed 5 per cent to $22.89 and Rio Tinto dived 5.1 per cent to $46.97.
Fortescue Metals, which today posted an 88 per cent drop in its full-year net profit to $US317 million, was especially hard hit, plummeting 14.6 per cent to $1.635.
Those manufacturing figures triggered a 4.2 per cent slump in the main Shanghai market and 5.4 per cent dive in Shenzen on Friday, defying recent government efforts to stem the losses with stock purchases and selling bans on some shareholders.
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Oil and gas producer Woodside was down almost 5 per cent to $30.00 – its lowest level since November 2011 – on those falling oil prices.
