The ASX was bashed down 2% today in a black finale to a see-sawing equities week.
The local market had the largest one day drop since February after bad unemployment news overnight sent Wall Street down more than 2%.
Michael McCarthy of CMC Markets says there’s been no appreciable deterioration in the outlook for Australian shares over the last two months, yet the market is down more than 8% from post GFC highs at the beginning of September.
“Underlying economic data remains mixed to positive, and company earnings are in reasonable shape,” he says.
“However, investors sitting on large capital gains, and considering a weak Europe and some troubling global hotspots, moved to lock in profits and protect against any further falls.”
Falling oil prices hit oil, gas and coal stocks.
Oilsearch shed 3.5%, oil producer Beach dropped 7.5%, and coal miner Whitehaven saw 10% sliced from its market value. Today’s falls place the sector down 12% since the beginning of September.
McCarthy says the Australia 200 index is rapidly approaching “value” levels and bargain hunting should be expected should shares drop further.
The S&P/ASX 200 closed down 2.05% to 5,188.30 points.
BHP was down almost 2.35% to $32.44 and Rio Tinto 2.98% to $57.27.
The big four banks were down more than 1.5% on the day.