Australian Markets Plunge 4% Tracking Weak Global Markets

Marcus Jacob
05 Aug, 2011
New York City

The Australian benchmark index plunged 4% following a worldwide sell-off that wiped out between 3% and 5% in most markets. The Australian index is down 19% from its peak and markets in Italy, Spain and Switzerland are down more than 20% in three months.

[R]4:30 PM Sydney – The Australian benchmark index plunged 4% following a worldwide sell-off that wiped out between 3% and 5% in most markets. The Australian index is down 19% from its peak and markets in Italy, Spain and Switzerland are down more than 20% in three months.[/R]

Australian stocks plunged following worldwide sell-off sparked in the U.S. The rising prospect of the U.S. sliding into a recession as the government is forced to cut spending demanded by the Republican Party controlled House and ongoing uncertainties in the euro-zone unnerved the market.

The U.S. is expected to face rising unemployment and slowing economy as the government prepares to cut $2.4 trillion in expenses and leave taxes unchanged for the rich.

The Australian index declined 4% today and plunged 7% in the week and the benchmark index is now down 19% from its peak in April.

The market indexes in Japan dropped 3.7%, in Hong Kong fell 4.3% and in India closed down 2.2%. Market indexes in Brazil are now down 25% from its high for the year. The index in Toronto declined 3.4% and is down 7.2% for the year and down 16% from the high in April.

The U.S. economy may need third stimulus package as the prospect of the recession rose on the weak reading in the service and manufacturing sectors.

The ASX 200 index decreased 171.10 or 4% to 4,105.40 and All Ordinaries index fell 4.2% or 183.20 to 4,169.70. The benchmark ASX 200 index is now down 19% from its peak in April.

The Australian dollar decreased 1.8% to US$1.044 after global economic worries dragged the currency lower.

In, trading, 4.48 billion shares changed hands worth $9.96 billion and 1,413 shares gained, 63 declined and 171 closed unchanged.

Stock Movers

Energy and miners traded lower after oil declined to $86 a barrel in New York trading and gold added $8.10 to $1,658.20 an ounce in New York trading.

BHP Billiton Ltd fell $1.94 to $38.12 and Rio Tinto decreased $4.58 to $72. Newcrest Mining Ltd decreased $1.45 to $39.20. Aquarius Platinum Ltd fell 23 cents to $3.76.

A day ago, Rio Tinto said first half profit increased 30% to $7.6 billion from $5 billion, including the gain of $810 million in foreign exchange.

Woodside Petroleum Limited declined $1.92 to $34.55 and Santos Limited fell 6.6% or 82 cents to $11.52. Origin Energy fell 3% or 43 cents to $13.66.

Banks closed lower for the second day in a row and for the second week declined on the growing uncertainties in the international debt market.

Commonwealth Bank of Australia decreased $1.29 to $46.26 and National Australian Bank decreased 90 cents to $21.77. ANZ declined 71 cents to $19.10.

Leighton declined 73 cents to $19.27.

David Jones Limited dropped 17 cents or 5.7% to $2.79 and Wesfarmers Limited declined 2.7% to $28.