Investor jitters over the looming prospect of a US sovereign debt default unleased a fresh wave of selling on the Australian share market.
At 1615 AEST on Thursday, the benchmark S&P/ASX200 index was off 73.6 points, or 1.62 per cent, at 4,463.8, while the broader All Ordinaries index was down 73.4 points, or 1.59 per cent, at 4,539.2.
On the ASX 24, the September share price index futures contract was 82 points weaker at 4,430, with 34,379 contracts traded.
The local market fell in line with major Asia bourses, with Japan’s Nikkei down 1.53 per cent and Hong Kong’s Hang Seng falling 1.08 per cent.
US policymakers have until August 2 to agree lift the US debt ceiling to avoid a sovereign default, which could have severe effects on global financial markets.
Most share trading accounts with the big brokers are usually anchored by US Treasuries – that’s their security. So if you start to cut bits and pieces off it, then you’re going to unstitch a lot of fabric,” said Bell Potter Securities senior client adviser Stuart Smith.
A US default would trigger heavy sales of US Treasuries once investors knew they would not be paid back all of their investment.
The local bourse was a sea of red, with market heavyweight BHP Billiton shedding 97 cents, or 2.26 per cent, to $42.03 and Rio Tinto falling $1.39 or 1.68 per cent to $81.20.
Gold major Newcrest Mining lost 33 cents, or 0.81 per cent, to $40.17.
At 1615 AEST the spot price of gold in Sydney was $US1614.70 per fine ounce, down $US9.75 from Wednesday’s closing price of $US1624.45.
The Australian dollar’s spike to a fresh record high on Wednesday meant the gold price has declined in relative terms.
Banks and financial stocks lost ground, with the big four banks led lower by Westpac which fell 37 cents, or 1.76 per cent, to $20.65.
Shares in Macquarie Group dived $1.34 or 4.57 per cent, to $27.99 after the investment bank said its first half result for fiscal 2012 would be lower than a year earlier and a US default would hurt the business badly.
“That was a big warning shock by Macquarie, that’s for sure,” Mr Smith said.
Wesfarmers lost 72 cents or 2.39 per cent to $29.37, even after the company’s annual sales results revealed a 6.7 per cent sales surge in its Coles supermarket chain.
Myer Holdings plunged 10 cents, or 4.12 per cent, to a record low at $2.33.
Preliminary national turnover was 2.27 billion shares worth $5.28 billion, with 250 stocks up, 854 down and 320 unchanged.
AAP
