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You can find the current article at its original source at https://www.theguardian.com/business/2018/oct/25/asia-pacific-australia-us-stocks-freefall-fears-ftse-markets-global-economy-intensifies
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| Australian share market in freefall amid fears over global economy | Australian share market in freefall amid fears over global economy |
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| Australian shares have slumped to a 12-month low as the market entered an official correction phase amid concerns about the strength of the global economy. | Australian shares have slumped to a 12-month low as the market entered an official correction phase amid concerns about the strength of the global economy. |
| After the worst day for tech stocks on Wall Street for seven years, the freefall in values was matched across Asia and prompted the Chinese central bank to pump billions more cash into the country’s financial system. | After the worst day for tech stocks on Wall Street for seven years, the freefall in values was matched across Asia and prompted the Chinese central bank to pump billions more cash into the country’s financial system. |
| A broad indicator of shares in the region – the MSCI Asia Pacific index – has now fallen 20.3% from the year-to-date high set on 29 January, representing an official bear market. The Vix “fear” index, which measures volatility across the market, has spiked sharply this week and was up 21% overnight. | |
| “The fear is palpable in stock markets at the moment,” Greg McKenna, an independent markets strategist in Australia, said on Thursday. “… This could get much worse before it gets better. Collapses happen after falls. That’s the danger.” | |
| China’s central bank decided it had seen enough and intervened for the fifth day running by injecting 100bn yuan ($14bn) into open market operations. It brings the total for the past five days to 540bn yuan, or $77bn. | China’s central bank decided it had seen enough and intervened for the fifth day running by injecting 100bn yuan ($14bn) into open market operations. It brings the total for the past five days to 540bn yuan, or $77bn. |
| ...and the VIX spiked to over 26, a level last seen in February.This similarity obfuscates two (related) differences. First, less enthusiasm on the part of #investors to buy the dip. Second, accumulated evidence that the #Fed no longer has the #markets back covered as in the past pic.twitter.com/23W7EhdOfe | ...and the VIX spiked to over 26, a level last seen in February.This similarity obfuscates two (related) differences. First, less enthusiasm on the part of #investors to buy the dip. Second, accumulated evidence that the #Fed no longer has the #markets back covered as in the past pic.twitter.com/23W7EhdOfe |
| Chinese stock markets, which have struggled under the weight of a slowdown in the economy and fears about US tariffs on Chinese goods, slumped 2.5% in the first minutes of trade before paring losses to 1.7%. | |
| Australia’s benchmark ASX200 fell to a year-low after losing more than 2%. At 2pm it was down 122 points at 5,706, loss of 2.1%, and looks set to suffer its fifth straight day of losses with energy, resources, technology and financial sectors all being sold. The embattled wealth management firm AMP, which is offloading its insurance arm, saw its shares fall by nearly 13% by lunchtime. | |
| Bad day for Aussie stocks with #ASX200 down to lowest in a year. Now on longest losing streak since Sept. 10. Financials have entered a bear market. #ausbiz #auspoll @BloombergAU @markets pic.twitter.com/5XwTuUiPE5 | Bad day for Aussie stocks with #ASX200 down to lowest in a year. Now on longest losing streak since Sept. 10. Financials have entered a bear market. #ausbiz #auspoll @BloombergAU @markets pic.twitter.com/5XwTuUiPE5 |
| The dive also continues the ASX’s worst month in more than three years, the market now down more than 8% for October – and 10% since August – meaning it is officially in correction territory. | The dive also continues the ASX’s worst month in more than three years, the market now down more than 8% for October – and 10% since August – meaning it is officially in correction territory. |
| Chart: South Korea's stocks in bear-market territory - pic.twitter.com/1mkOs2whpf | Chart: South Korea's stocks in bear-market territory - pic.twitter.com/1mkOs2whpf |
| The gloomy mood was spread across the region, with South Korea’s stock market entering a bear market after growth in the third quarter came in at a lower-than-expected 2%. The export-driven economy is seen as a good indicator of the health of global trade so the poor figures saw stocks on the Kospi index fall 2.4%. In Japan, the Nikkei was down 2.8%. | |
| The US dollar continued to gain strength heaping pressure on sterling, which fell to $1.289, the euro (down slightly at $1.14) and the Australian dollar which was buying US70.7c. | |
| Thursday’s nervous selloff comes after US stocks fell overnight, where a rout in technology stocks saw the largest daily decline on the Nasdaq since 2011. The falls confirmed a correction for the Nasdaq and erased the Dow and S&P 500’s gains for the year. | |
| If the month ended today, it would be the worst monthly decline for the S&P 500 Total Return Index since February 2009: -8.8%. $SPX pic.twitter.com/9rWxn1k8qD | If the month ended today, it would be the worst monthly decline for the S&P 500 Total Return Index since February 2009: -8.8%. $SPX pic.twitter.com/9rWxn1k8qD |
| “Weak US housing data, mixed corporate earnings results, trade war fears and concerns regarding a slowing global economy all contributed to the sell-off,” Sydney-based Rivkin Securities said on Thursday. | “Weak US housing data, mixed corporate earnings results, trade war fears and concerns regarding a slowing global economy all contributed to the sell-off,” Sydney-based Rivkin Securities said on Thursday. |
| In Australia, faltering consumer sentiment and falling house prices are compounding the impact of global factors. On Thursday, householders and property developers were warned that the country’s housing market should prepare for a downturn of a scale not seen for 30 years. | |
| The consultancy Ernst & Young said in a report that it does not expect a crash but said falling prices and tighter credit meant a sustained period of uncertainty, which will cloud future developments and projects. | The consultancy Ernst & Young said in a report that it does not expect a crash but said falling prices and tighter credit meant a sustained period of uncertainty, which will cloud future developments and projects. |
| “Unlike previous downturns, interest rates look set to remain low. While we don’t envisage a crash, it has become much harder for homebuyers and developers to secure finance,” said Richard Bowman, real estate partner at EY Australia. | “Unlike previous downturns, interest rates look set to remain low. While we don’t envisage a crash, it has become much harder for homebuyers and developers to secure finance,” said Richard Bowman, real estate partner at EY Australia. |
| Jonathan Chan, of CMC Markets in Sydney, said Australia could benefit from further Chinese stimulus but would also feel the brunt of a US-China trade war. “The aftermath of US-China trade war is slowly surfacing in the US corporate earnings reports, leading to a global risk-off tone,” he said on Thursday. “Investor buying in Australia may be limited but a bounce is possible if more corporations reveal a stronger sales and revenue number.” | Jonathan Chan, of CMC Markets in Sydney, said Australia could benefit from further Chinese stimulus but would also feel the brunt of a US-China trade war. “The aftermath of US-China trade war is slowly surfacing in the US corporate earnings reports, leading to a global risk-off tone,” he said on Thursday. “Investor buying in Australia may be limited but a bounce is possible if more corporations reveal a stronger sales and revenue number.” |
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