Australian shares slumped to an eight-month low this morning as the Aussie dollar skidded lower and Asian markets fell sharply.
At lunchtime the ASX 200 was down 69 points or 1.55% at 4401 after earlier hitting its lowest level since late August. The falls dragged down cyclical and defensive sectors alike, with telecoms the only sector to trade positive as Telstra edged higher.
"There is a general malaise covering world-wide markets," CMC Markets analyst David Taylor told Fairfax. "Last night's catalyst (was) the ban on short selling by Germany."
The Australian dollar has fallen nearly 2 U.S. cents in the last 24 hours and was this morning down more than 8% since the start of the month. The dollar traded at 85.28 U.S. cents this morning, down from 87.23 U.S. cents in late afternoon trade yesterday.
Consumer sentiment continued to sour after a string of interest rate hikes. The WBC-MI consumer sentiment index fell 7% last month. It was the second straight fall in consumer sentiment, and the largest since October 2008, at the height of the global financial crisis.
"This result indicates that the response to the Budget was negative on balance but we expect that the most important factor causing such a large fall in the headline index was the rate hike," Westpac chief economist Bill Evans said in a statement quoted in The Australian. "We are clearly back in that range for the variable mortgage rate where future rate hikes are going to hurt consumers and the index can be expected to respond accordingly."
In company news, iron ore miner Fortescue Metals announced that it was holding off on two of its three expansion projects because of uncertainty over a proposed new tax on mining profits. Work on the Solomon and Western Hub iron ore deposits in WA have been suspended.
Japan's Nikkei retreated 1.6% in morning trade, Shanghai was recently off 0.71% and Hong Kong's Hang Seng down 1.7%. Dow futures were recently at a moderately bearish -60.
Crude oil futures continued to fall this morning, sliding another 96 cents to $68.31 a barrel. The spot gold price was also significantly weaker, down $10.60 or nearly 1% at $1,213.60 an ounce.
A hectic morning. Some severe technical damage done to a lot of stocks, not to mention the indexes, unless we rally from here. Great bounce trading this morning but ugly looking forward. Profits booked in FMG, BOL, NWH and AMX. Out for brokerage in FGL - expected it do better as a defensive but this selling is dragging all sectors lower. Got into MND too early, still holding. Also grabbed some BTT in that dump.
