The Australian market looks set to open sharply lower following significant falls on worldwide markets amid further fears over China’s economy and a Greek exit from the eurozone.
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Dr Oliver said he was sticking to his forecast of 6000 points for the ASX 200 index by the end of this year, even though it would be a big ask – up 20 per cent from yesterday’s close of 5001 points.
Emerging market economies, many reliant on exporting raw materials, have been hit particularly hard by the spectre of slower Chinese growth and sliding commodities.
Added to that, the Chinese stock market plunged more than eight per cent on Monday, suggesting that Chinese authorities had decided to let it go or had lost control of it.
Driven by a steep drop in China’s stock market, Australia’s main indices dropped 3.7 per cent by about midday as uncertainty wreaked havoc on global markets.
The market is now trading at more than two-year lows, and the benchmark S&P/ASX 200 index is on the threshold of trading below 5000.
The local market was a sea of red throughout the day, with CMC Markets chief strategist Michael McCarthy saying it was “carnage out there”.
Dr Oliver said other pre-GFC ingredients – such as companies loaded up on debt, investors euphorically buying shares and rising interest rates – were not present today either.
There have been losses across all sectors, with banking, mining and energy the worst affected.
BHP Billiton was down 4.7 per cent to $22.97 – falling below $23 for the first time since November 2008, during the height of the financial crisis – while Rio Tinto was off 5.4 per cent.
National turnover was 777 million securities worth $1.53 billion.
Electronics retailers Harvey Normand and JB Hi-Fi were down around 3.6 and 5 per cent respectively, while department store Myer was off 3 per cent. Shares crumbled 7.6 per cent to $1.40.
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. The euro gained 0.5 per cent to $1.1441 after touching a two-month high of $1.1458.
A man is seen in a reflection to stop to look at the electronic share board at the Australian Stock Exchange (ASX) in Sydney.
The tumbles came after a torrid session on Wall Street last week when the Dow Jones Industrial Average lost more than 1,000 points and the S&P 500 fell below 2,000 points for the first time since January 30.
There is clearly some panic selling occurring and there is little in the way of technical support below the current market price.
The Australian Stock Report’s head of research Chris Conway said China’s recent currency devaluations have investors concerned that the world may slip into deflation.
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“If they do increase their interest rates, then you will see movement of money from equity markets, probably into bond markets”, he said.
