The Australian share market sank 4 per cent today, or around $55 billion. It was the steepest sell-off in more than two years. Fears of a global economic downturn intensified as falls on Wall Street fuelled concerns of a double dip recession in the US, sending shockwaves back home. Local stocks fell sharply at the open and remained on or near session lows for all of the day.
The S&P/ASX200 Index plunged 171 points to close at 4,105. For the week it was down 319 points.
On the futures market the SPI is down 192 points.
US Markets
The Dow Jones Industrial Average shed 760 points, over the four trading days this week. The S&P 500 Index retreated 92 points, NASDAQ dropped 200 and the 100 Index was down 156. That was all ahead of key US jobs data, due out later today.
Market Views
Charlie Aitken from Bell Potter: On why the Australian share market is down today, which stocks have fared the worst and how long we can expect the falls to continue.
Alastair McRae from Vantage FX: On how the Australian dollar has reacted to the collapse of confidence from global markets.
Economic news
The Reserve Bank of Australia’s quarterly statement has cautioned that US and European debt woes could unfold in a "disorderly and disruptive manner" leading "to a marked rise in global risk aversion and uncertainty." The RBA also cut its domestic growth forecast for the year by 1 per cent to 3.25 per cent.
Reporting season results
Global miner Rio Tinto Limited (ASX:RIO) posted a record first half profit of $US7.8 billion, but missed analysts expectations of a profit in excess of $US8 billion. Record iron ore prices and a strong Australian dollar were attributed for a 35 per cent increase in the interim result. Shares in Rio Tinto fell 5.98 per cent today, closing the week at $72.00.
Navitas Limited (ASX:NVT) reported a full year net profit of $77.4 million, representing a 20 per cent improvement from the year before. The education provider said an increase in student demand underpinned the strong results, which were in-line with its expectations. Shares in Navitas were one of the few stocks to close on positive ground today, finishing 2.29 per cent higher at $3.58.
Rio’s subsidiary Energy Resources of Australia Limited (ASX:ERA) swung from a profit of $22.7 million to a loss of $122 million in the first half of 2011. The uranium miner was impacted by wet weather, forcing the suspension of its Ranger Mine operations in the Northern Territory.
Transurban Group Limited (ASX:TCL) posted a 89 per cent jump in net profit per cent for the 2011 financial year, coming in at $112.5 million. The result was boosted by increased traffic and toll fares on its roads in addition to cost cutting measures.
Full year profit guidance
Defying a weak retail trend Kathmandu Holdings Limited (ASX:KMD) forecast up to a 36 per cent improvement in full year earnings. The outdoor clothing and equipment retailer says favourable weather helped to drive stronger than expected sales result.
Leighton Holdings Limited (ASX:LEI) improved its net profit forecast for the 2011 financial year. The construction company now expects to book an after tax loss of around $408 million, narrowing from a loss of $427 million expected in April.
Best and worst performers
And all sectors finished deeply in the red. The sector was the smallest losses was Telco Services, falling 24 points to close at 995. The worst performing sector was Energy, dropping 774 points to close at 13,052 points.
The best performing stock in the S&P/ASX200 and one of the two to close on positive ground was Navitas, shares added 2.29 per cent to close at $3.58. Shares in Cabcharge also ended higher. Shares in Duet Group closed steady.
The worst performing stock was Linc Energy, shedding 19.23 per cent to close at $2.10. Shares in Karoon Gas Australia and White Energy Company also finished sharply lower today.
Commodities
Gold is trading at $US1,662 an ounce, up $36.46 on the week. Light crude is down $1.52 cents to $US85.11 a barrel.
The Australian dollar
The Australian dollar buying $US1.0451 cents, down 5.38 cents on the week.
