The sharemarket has shed $35 billion in the biggest one-day loss in nine months as the strong surge of 2013 came to an abrupt end.
The benchmark S&P/ASX200 closed at the day’s low, down 118.6 points, or 2.3 per cent, to 4980.1, while the broader All Ordinaries dropped 115.8 points, or 2.3 per cent, to 4998.6.
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Heavy losses shock market
The Australian stock market has its worst day in about a year, as shares slip by 2 per cent.
All sectors finished lower, contributing to the biggest sell-off since May last year, with energy stocks slumping 4.6 per cent, materials sliding 3.4 per cent and financials falling 2.4 per cent.
‘‘I’m not overly alarmed, this is probably a healthy break for the market after a strong run,’’ said Mike Kendall, executive director JBWere.
‘‘Pretty much everyone knows that things just won’t go up in a straight line,’’ he said.
Another factor contributing to the sell-off was comments from the US Federal Reserve which, citing a risk of inflation, hinted at the winding back of its quantitative easing program.
Miners suffered heavy losses, with BHP falling 3.8 per cent to $37.17, Rio Tinto sliding 3 per cent to $67.30 and Fortescue Metals dropping 2.4 per cent to $4.80.
Mr Kendall said resource companies had been feeling the pressure of capital expenditure coupled with rising labour costs and investors expectations.
‘‘I think a few investors are taking a view that the challenges in that part of the market are probably greater than what’s being priced into a stock price,’’ he said.
The financial sector, which had been responsible for a large part of the positive run this year, also felt the wrath of the pull-back. NAB dropped 3.7 per cent to $29.42, CBA fell 3.1 per cent to $64.81, Westpac slipped 2.8 per cent to $29.49 and ANZ lost 2.6 per cent to $27.98.
Origin Energy was one of the biggest losers of the day, down 8.5 per cent to $11.33, after the company’s half year net profit fell more than $200 million from the corresponding period in the previous year.
Whitehaven Coal shares dived 6.1 per cent to $2.94 as managing director Tony Haggarty stepped down after rumoured difficulties in dealing with Nathan Tinkler since he became a major shareholder.
Qantas was one of the few that bucked the downward trend. The airline reported it had more than doubled its first half net profit to $111 million. Its shares finished up 2.8 per cent to $1.66.
IAG shares jumped 2.8 per cent to $5.57 after the insurer reported a more than tripling of its first half earnings to $461 million, citing fewer claims from natural diaster than in previous earnings as a major factor behind the jump.