Investors stripped $27 billion from the Australian stockmarket yesterday as shares closed at their lowest level in more than five years after heavy falls from the banks and big miners.
The benchmark S&P/ASX200 index fell 94.4 points, or 2.82 per cent, to 3250.1 its lowest close since December 19, 2003. The broader All Ordinaries shed 93.1 points, or 2.82 per cent, to 3203.8 its lowest close since December 11, 2003.
CMC Markets senior dealer Dominic Vaughan said negativity in the financial sector and lower commodity prices had combined to drive the market lower.
''Financial stocks have been hit quite hard and they continue to get sold quite heavily, while BHP and Rio are down as well,'' Mr Vaughan said.
''The reporting season has been okay but the forward earnings are probably going to come under pressure.
The market opened 2 per cent lower following falls on Wall Street on Friday.
Deutsche Bank currency strategist, John Horner said, ''We will continue to see equity markets everywhere confronting the reality of a global slowdown.''
Banks led the market lower, with ANZ shedding 21c to $13.10, the Commonwealth Bank falling $1.29 to $28.51, National Australia Bank losing 37c to $17.51 and Westpac down 59c to $16.30.
Shares in Macquarie Group, down 84 percent off a May 2007 peak, slumped 7.2 percent to $15.75.
Retailers were mixed, with Woolworths up 11c at $26.25, Coles' owner Wesfarmers up 10c at $17.70, Harvey Norman adding 5c to $1.96 and David Jones down 8c to $2.26.
Qantas shed 11.5c to $1.45 and said it would again reduce its international fuel surcharges from today.
Fairfax Media added 1.75c to 88c after coming out of a trading halt, while Consolidated Media fell 4.5c to $1.955. News Corp fell 21c to $9.84 and its non-voting shares dipped 35c to $8.64.
Fairfax Media was the most traded stock, with 54.6 million shares worth $50.34 million changing hands.
Fairfax Media said it had raised $500million from an offer of shares to institutions. The retail leg of the offer opens tomorrow.
The publisher of The Canberra Times, The Age and The Sydney Morning Herald said on Friday it wanted to raise up to $684million under a three for five non-renounceable pro-rata entitlement offer of shares at 75c each.
The net proceeds of the offer will be used to pay down a large part of its debt maturing in 2011 and 2012.
The energy sector lost ground, with Woodside dropping $1.53 to $34.27, Santos giving up 47c to $15 and Oil Search losing 21c to $4.81.
Big miners also dragged on the market. BHP Billiton fell 88c, or 3.05 per cent, to $27.95 and rival Rio Tinto fell $3.02, or 6.38 per cent, to $44.23.
The spot price of gold in Sydney ended at $US952.40 an ounce, up $US11.45 on Friday's local close.
The gold miners were stronger, with Newcrest adding $2.51 to $33.49, Lihir putting on 21c to $3.51 and Newmont up 33c at $6.53.
Market turnover was 1.24 billion, worth a total of $3.37 billion, with 285 gainers, 646 losers and 266 stocks closing unchanged.
The Australian dollar ended the local session weaker as investors sold risk sensitive assets following data that revealed the worst contraction in the US economy in 26 years.
At 5pm the currency was trading at US63.37c, down 1.88 per cent from Friday's local close of US64.58c.
The preliminary estimate of US gross domestic product issued on Friday night showed the world's largest economy contracted at an annualised pace of 6.2 per cent in the December quarter.
But the Australian bond market closed firmer as investors balanced their holdings of fixed-income securities ahead of the central bank's decision on interest rates today.
Money markets are pricing in a 0.25 percentage point cut to the cash rate to 3 per cent, which would be its lowest level since March 1960. AAP
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