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Australian share market tumbles at start of trade after global markets fall Australian share market tumbles at start of trade after global markets fall
(about 2 hours later)
The Australian share market has plunged at the start of trade, with losses felt across the board from banks to resources stock as uncertainty grips global markets.The Australian share market has plunged at the start of trade, with losses felt across the board from banks to resources stock as uncertainty grips global markets.
The benchmark S&P/ASX 200 and the All Ordinaries indices fell more than 2.4% in the first 20 minutes of trade on Monday.The benchmark S&P/ASX 200 and the All Ordinaries indices fell more than 2.4% in the first 20 minutes of trade on Monday.
Related: Global stocks sell-off deepens as panic grips markets - live
Banking giants including the Commonwealth, Westpac, National Australia Bank and ANZ along with the big miners Rio Tinto and BHP Billiton all shed about 2% each.Banking giants including the Commonwealth, Westpac, National Australia Bank and ANZ along with the big miners Rio Tinto and BHP Billiton all shed about 2% each.
Telstra also dropped, by more than 1%.Telstra also dropped, by more than 1%.
Wall Street endured a torrid stretch last week when the Dow Jones Industrial Average lost more than 1,000 points and the S&P 500 fell below 2,000 points for the first time since January 30.Wall Street endured a torrid stretch last week when the Dow Jones Industrial Average lost more than 1,000 points and the S&P 500 fell below 2,000 points for the first time since January 30.
As well as fielding renewed fears about China’s economy and a possible exit from the eurozone by Greece, investors were unsettled by US oil prices, which on Friday dipped below $US40 for the first time in six years.As well as fielding renewed fears about China’s economy and a possible exit from the eurozone by Greece, investors were unsettled by US oil prices, which on Friday dipped below $US40 for the first time in six years.
CommSec chief economist Craig James said that despite the uncertainty on global markets, the US and Australian economies remained in good shape.CommSec chief economist Craig James said that despite the uncertainty on global markets, the US and Australian economies remained in good shape.
He also believed worries about Greece and China were overdone.He also believed worries about Greece and China were overdone.
“At present, we would view the global sharemarket correction as a correction we had to have – a situation that will be beneficial in injecting more value into markets,” James said.“At present, we would view the global sharemarket correction as a correction we had to have – a situation that will be beneficial in injecting more value into markets,” James said.
“There are clearly risks, but the data indicate that US and European economies continue to recover, lower oil prices will serve to boost consumer and business spending, and Chinese authorities are trying a range of measures to maintain momentum in their economy.”“There are clearly risks, but the data indicate that US and European economies continue to recover, lower oil prices will serve to boost consumer and business spending, and Chinese authorities are trying a range of measures to maintain momentum in their economy.”
Treasurer Joe Hockey said that while markets would go up and down, the fundamentals were still good for the global economy, particularly the US.Treasurer Joe Hockey said that while markets would go up and down, the fundamentals were still good for the global economy, particularly the US.
He said several factors would cause volatility in the markets in the next few months, particularly if the US Federal Reserve decided to move on interest rates in September.He said several factors would cause volatility in the markets in the next few months, particularly if the US Federal Reserve decided to move on interest rates in September.
“If they do increase their interest rates, then you’ll see movement of money from equity markets, probably into bond markets,” he said.“If they do increase their interest rates, then you’ll see movement of money from equity markets, probably into bond markets,” he said.
Such volatility would hit confidence in Australia, he said, and that’s why the government had to keep reminding people that our economy is one of the fastest-growing in the world right now.Such volatility would hit confidence in Australia, he said, and that’s why the government had to keep reminding people that our economy is one of the fastest-growing in the world right now.
Related: Fortescue to cut hundreds of jobs despite partial rebound in iron ore priceRelated: Fortescue to cut hundreds of jobs despite partial rebound in iron ore price
In profit results, Andrew Forrest’s Fortescue Metals suffered an 88% slide in its full-year profit in the face of sliding iron ore prices.In profit results, Andrew Forrest’s Fortescue Metals suffered an 88% slide in its full-year profit in the face of sliding iron ore prices.
The iron ore miner made a net profit of US$316m (A$433.29m) for the year to 30 June, down from US$2.74bn a year ago.The iron ore miner made a net profit of US$316m (A$433.29m) for the year to 30 June, down from US$2.74bn a year ago.
The company has cut its fully franked dividend to two cents a share, from 10 cents a share last year.The company has cut its fully franked dividend to two cents a share, from 10 cents a share last year.