Australian stocks are tanking

Photo: Getty Images.

The local market has continued to come under heavy selling pressure after it fell hard in early trade, following a global rout sparked by Brexit fears.

The ASX 200 has now dropped below the key support level of 5300 points on the open and is closing in on 5200.

A short time ago, the index was at 5,209, down 103 points or 1.9%. All ten sectors were in the red.

The major banks and the big miners led the fall. The ANZ was down 2.78% to $23.62 and BHP was 2.58% lower at $18.31.

Energy stocks were down 2.7% as a group with Woodside Petroleum dropping more than 2.8% to $26.24 and Santos 5.3% to $4.47.

ASX 200 5 minute chart (http://www.investing.com/indices/aus-200)

Global markets are jittery over the prospect of a Brexit after a June 23 referendum and the fallout from the UK leaving the European Union.

Chris Weston, market analyst at IG, says the key consideration here is what happens if we do actually see a leave vote and a sudden shock to markets.

“What have central banks got in the kitty this time around? The answer of course is significantly less than in prior cycles,” he says.

“As I have argued for some time, for risk assets to find sizeable downside means a strong loss of confidence that central banks can dictate financial markets.”

The S&P 500 closed down 0.8% on Monday and European markets have dropped to a three month low.

Gold, the traditional safe haven during troubled times, has been rising fast, heading to the $1300 an ounce level over the last week. Likewise, the Japenese yen is also playing its role as a safe haven for forex traders. At 105.95 USDJPY is closing in on the lows for the year (thye USDJPY falls when the Yen is strong).

One area of strength in local markets is the remarkable resilience of the Australian dollar which is hanging tough at 0.7383 largely unmoved on the day after dipping below 74 cents last Friday.

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