A savage reversal in the recent commodities rally hit Australian shares hard on Wednesday despite some solid earnings results, as investors punished the big four banks and BHP endured its worst day since 2008 with a massive 8.2 per cent fall.
A decline on Wall Street plus a 5 per cent drop in Brent crude oil to $US32.94 per barrel brought the market down from the onset, with the benchmark S&P/ASX 200 index continuing to slide in the session to finish 104 points, or 2.1 per cent, lower at 4875.0 while the broader All Ordinaries index slipped 1.9 per cent to 4943.3.
Could BHP and Rio turn to a cartel?
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"It's the same concerns emerging about global growth," said Macquarie division director Martin Lakos. "From a sentiment perspective oil may have driven the market today. Energy stocks are down around 3 per cent."
But it was overwhelmingly a decline led by the blue-chips, he said. "Over 40 points of today's fall was the big four banks - adding BHP that's another 16 points," he said.
"Between the banks, BHP, Rio, Woolworths and Wesfarmers, that amounts for 70 points of today's fall," he said.
"BHP has been the heavily traded name today with volume 150 per cent above the 20-day average and has had its worst one day decline since 2008," IG chief market analyst Chris Weston said.
"While many are attributing this to Aussie traders getting it very wrong yesterday, if you overlap a chart of BHP and West Texas Intermediate one can see oil has been the bigger driver."
BHP shares took a massive beating, falling 8.2 per cent to $16.18 in their biggest one-day drop since December 2008. However the sell-off comes after an impressive rally catapulted the shares up as much as 25 per cent over the past three weeks, and they are still up around 15 per cent from this month's lows.
Rio Tinto fell 2.4 per cent to $42.02 while among among the banks, ANZ crashed 3.4 per cent to $22.32, Commonwealth Bank slipped 2.7 per cent to $71.26, National Australia Bank was down 3.8 per cent to $24.49 and Westpac fell 3.9 per cent to $28.49.
Telstra edged down 0.2 per cent to $5.16 after it was announced chair Catherine Livingstone had quit the board, to be replaced by Asciano chief executive John Mullen.
In a busy day for earnings, Fortescue Metals plummeted 4.7 per cent to $2.00 after posting a small fall in net profit to $US319 million for the December half, down from $US331 million in the previous year.
The Perth-based mining group said it was aiming to cut cash costs, one element of its total break-even, to $US13 a wet tonne by June, after hitting its full-year target of $US16 a tonne early in December.
A strong performance from Wesfarmers retail brands, including Bunnings and Coles supported a 1.2 per cent increase in the conglomerate's net profit after tax to $1.4 billion for the half year, offsetting a slump in the resources exposed segments of the business. Wesfarmers still dropped 4.8 per cent to $41.50, while Woolworths retraced 2.6 per cent to $22.33.
Bega Cheese's shift away from commodities to higher value-added products such as infant formula helped boost profits, with the company posting Bega a 9.9 per cent surge in underlying net profit to $14.8 million in the six months to December 31. Bega was one of the few companies in the green, lifting 2.1 per cent to $5.74.
Flight Centre Travel Group has cautiously reaffirmed its full-year profit guidance after reporting a 3.4 per cent rise in half-year underlying pretax interim profit to $145.9 million amid "challenging trading conditions". Shares fell 0.5 per cent to $40.28.
Engineering group WorleyParsons reported a 78 per cent slump in first half net profit to $23.1 million and said it would not pay an interim dividend after earnings fell sharply in its core hydrocarbons and minerals businesses.
The company also signalled it would sell "non-core assets" to strengthen its balance sheet. The result was weaker than analysts were expecting and shares crashed 13 per cent to $3.66.
Cost cutting helped port and heavy freight operator Asciano boost half year net profits by 5.3 per cent to $199.8 million as its board awaits a formal takeover offer from suitors Qube and Brookfield Infrastructure.
Asciano's underlying EBIT were flat at $290.9 million in its Pacific National rail haulage business but rose 0.8 per cent in its Patrick ports division to $116.7 million due to growth in bulk and automotive port services. Shares were flat at $9.01.
Slater & Gordon has suspended trading in its shares until the release of half-year results, due February 29 , as it tries to sort out "material items" which includes "testing and assessment of the goodwill values for impairment of the UK business". Shares were at 83 cents.