Australian shares dropped more than 2% yesterday, losing about A$44bn ($29.52bn) in value, as Washington’s move to slap tariffs on Europe and weak US data added to escalating fears over slowing global economic growth.
The S&P/ASX 200 index dived 2.2%, or 146.9 points, to 6,493, its lowest close in over a month.
Overnight, the United States said it will slap tariffs on $7.5bn worth of goods from the European Union, threatening to spark a transatlantic trade war as global markets grapple with the more than year-long US-China trade tussle.
Also originating from the United States was two straight days of weak data – in the form of manufacturing and private jobs figures – with investors now awaiting today’s non-farm payrolls for further clues about the health of the world’s largest economy.
“Numbers out of the US need to improve in the next couple of months for investors to feel more confident that a recession is not around the corner,” said Michael Gable, the managing director at Sydney-based Fairmont Equities.
Concerns about the state of the world economy led to a broad sell-off in Australia, with gold stocks the only bright spot as investors sought safe-havens.
Just 15 out of the 200 stocks on the benchmark ended the session in positive territory, with financial stocks dominating losses.
The Big Four banks were among the top drags, with National Australia Bank losing 3.5%. The other three closed between 2.4% and 2.8% lower.
Morgan Stanley downgraded NAB, and warned that all the major banks should lower their payout ratios and target higher capital levels instead.
Energy and mining stocks were also among top losers on sustained weakness in oil prices and commodities.
Global miners BHP Group and Rio Tinto slumped 3.2% and 4.2%.
Gold stocks saw support on safe-haven buying, with Newcrest Mining up 2.8%.
Elsewhere, agricultural firm Webster Ltd surged 54% to a near 16-month high after it received an A$854mn takeover offer from shareholder PSP Investments.
New Zealand’s benchmark S&P/NZX 50 index dropped 1.2% to two-week lows of 10,821.21.
Local listings of Australia and New Zealand Banking Group Ltd and Wesptac slumped.
However, Fonterra Shareholders Fund was among the few bright spots on the index, rising 4.3%.
A woman takes a photograph as an electronic board displays stock information at the Australian Securities Exchange in Sydney (file). The S&P/ASX 200 index dived 2.2%, or 146.9 points, to 6,493 yesterday, its lowest close in over a month.
