Concerns about a US government shutdown have hammered the Australian share market to its worst one-day fall in almost two months.
The Republicans and Democrats are struggling to strike a deal to keep government money flowing. President Barack Obama warned if it an agreement could not be made it would force a partial government shutdown of services deemed non-essential.
The warring words sparked broad-based sell offs across global sharemarkets. Australia’s benchmark S&P/ASX 200 Index fell 88.2 points, or 1.7 per cent, to 5218.9, while the broader All Ordinaries shed 84.6 points, or 1.6 per cent, to 5217.7.
Finance stocks were among the worst hit during today’s sell off. Commonwealth Bank plummeted 2.3 per cent to $71.50, while ANZ weakened 1.9 per cent to $30.93.
But Macquarie Private Wealth divisional director Martin Lakos said the loses were on slim volumes.
‘‘It’s a big one day fall. There has been a little bit of risk off taking place,’’ Mr Lakos said.
‘‘But we’ve had about $2 billion turnover. That’s half the daily average for the quarter. It certainly suggests that that’s not a strong commitment to the downside.’’
Despite the slide into negative territory, the ASX finished the September quarter up 8.7 per cent, its best result since 2009.
Mr Lakos said an interest rate cut, weakening Australian dollar and a clear result in the federal election had buoyed stocks.
St George Bank economist Janu Chan said above all a reversal of expectations of the growth of China, Australia’s biggest trading partner, had fuelled optimism.
Fortescue Metals was among the biggest winners for the quarter, advancing 56.3 per cent, while fellow miner Arrium leapt 56.4 per cent.
Gold stocks also enjoyed a strong rally, particularly after the US Federal Reserve delayed tapering its $US85 billion a month asset buying program. Beadell Resources was up 84 per cent, while Evolution Mining firmed 48.25 per cent.
ANZ head of commodity strategy Mark Pervan said during the middle of the year it was widely expected that Chinese growth for the full year would disappoint, particularly after soft readings in both its official and HSBC manufacturing data.
‘‘But as is the case, China has this ability to reignite growth,’’ Mr Pervan said. ‘‘I think we are starting to see a little bit more momentum in some stimulus roll out in China. The PMI reads have also been consistently better in the past two months.’’
Mr Pervan said the stronger than expected PMI readings, combined with Chinese manufacturers restocking their inventories had supported Australian shares, particularly miners.
He said for the past 18 months manufacturers in China had been operating on ‘‘short-term order books’’ buying stock on a ‘‘just on time basis.’’
‘‘At the end of the day, they’re buying more iron ore, base metals and coal. That’s the end game and that’s the bottom line profits for the mining sector here in Australia.’’
Mr Pervan expected China’s economy to continue to moderately improve in the fourth quarter, which would flow through to the ASX.
A handful of defensive stocks were also caught in today’s sell off. Blood products maker CSL dived 2.6 per cent to $64, while Telstra eased 1 per cent to $4.97. Wesfarmers, the owner of Coles and Bunnings, slid 1 per cent to 1.4 per cent to $41.13.