Over $33 billion erased from Australian share market

More than $33 billion was erased from the value of the Australian share market on Thursday, marking the largest one-day percentage fall in a year on renewed concerns about a world economic slowdown.

At the close, the benchmark S&P/ASX200 index was down 106.9 points, or 2.3 per cent, at 4600.4, while the broader All Ordinaries index slumped 105.4 points, or 2.2 per cent, at 4683.2.

The size of the retreat is the most since almost 3 per cent was lopped off the market’s value on 7 June, 2010.

“A lot of the drive is coming from overseas markets at the moment,” revealed CMC Markets sales trader Ben Taylor, adding that despite better than forecasted retail sales figures for Australia in April, released earlier, investors were focused on a slowdown in global economic growth.

“There was a shocking set of (manufacturing) PMI data (purchasing managers’ index, used to measure strength in the sector) for the UK, China and euro zone,” added Taylor “Then US markets fell last night... Moody’s downgrade of Greek debt put the nail in the coffin.”

U.S. stocks dived after U.S. manufacturing had its biggest fall since September 2009 in May, and an independent report showed private-sector employers added a paltry 38,000 jobs in May, the smallest since September and well below an expected 175,000 jobs.

“The one thing the U.S couldn’t afford to have fallen over was the recovery in the employment situation. That spooked the market and really signalled that we’re in some short-term weakness,” said Cameron Peacock, a market analyst at IG Markets.

“June’s going to be a bit of a write-off. It’s probably not going to be until the second half of July that you start to see markets move forward — and that’s all dependent on a pickup in economic data,” added Peacock “I’d just be sitting on the sidelines over this next 6-8 weeks and wait and see how the dust settles”.

Meanwhile Austock Securities senior client adviser Michael Heffernan said there might be a bit of bargain hunting coming in a bit later in the day, with some bellwether stocks starting to look attractive.

“We’ve got CBA below $50; BHP below $44. This sort of thing can entice investors who are looking for good value.”