The ASX just had its worst day in 4 months

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Australian stocks were destroyed.

The big four banks lost more than 4% as the ASX 200 crashed through the key 4900 point level.

At the close, the index was at 4,832.10, down 143.29 points or 2.88%, the largest percentage decline since Sept 29 last year and the weakest close since June 2013.

Local investors were caught in a global selloff over concerns about banks in Europe and worries on Wall Street about the prospects for economic growth. The S&P 500 closed 1.4% down, but was down well over 2% earlier in the session.

In Europe, the banking sector fueled a dive. The STOXX Europe 600 Banking index closed 5.6% weaker and Deutsche Bank lost 9.5%.

“It’s been a day of trauma for the equity bulls and for many the towel has been thrown in,” says Chris Weston, Chief Market Strategist at IG.

“The long-felt pain in the energy sector has now fully morphed into a banking crisis.”

He says the big four Australian banks will be raising up to $100 billion of debt throughout the year, much of it issued offshore.

“With funding costs on the rise, this will affect net margins and presumably this will be passed onto the costs for business loans,”Weston says. “So there will be an in impact on credit and wider economics.”

Westpac went below $30 a share, down 5.16% to $28.70. The NAB fell 4.78% to $24.90, the ANZ shed 3.96% to $22.79 and the Commonwealth 4.6% to $72.87.

The big miners also lost ground with BHP dropping 1.96% to $16.05.

Energy stocks fell more than 3% on the back of weaker oil prices. Santos lost 4.97% to $3.06.

Gold stocks soared, on a rally in the price of the precious metal, with Northern Star up 7.7% to 3.63 and Ocean Gold 11.5% to $3.87.

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