Australian shares have lost around $33 billion after a sharp fall in US markets last Friday sent local investors running for the exits on Monday.
The benchmark S&P/ASX200 stock index ended the day down 95.2 points, or 1.56 per cent, at 6,026.2 points, with all sectors deep into the red except for defensive utility stocks.
On Wall Street on Friday, the Dow Jones Industrials Average and the S&P 500 fell more than two per cent after strong US jobs data raised fears of an acceleration in rate hikes and the arrival of a long-expected correction in equities markets.
IG dealer Stuart McDonald said it was expected that the Australian market, and others, would follow the negative US lead on Monday.
“You had quite a substantial sell-off in the US market on Friday, with the biggest fall in the Dow since July 2016,” Mr McDonald said.
Mr McDonald said that although jobs data released in the US on Friday had been better than expected, the strong numbers had raised fears that the US Federal Reserve may accelerate hikes in interest rates, which spooked investors.
Mr McDonald said the Australian share market has not had a major correction for some time but it was hard to say if today’s fall was the start of something significant.
Investors will be looking to US markets tonight for further indicators of direction and after the close of the Australian session, US futures remain negative.
On the local bourse, energy stocks led Monday’s broad retreat after a drop in oil prices.
Woodside Petroleum fell 2.6 per cent to $33.35, Santos retreated 3.5 per cent to $5.18, and Oil Search fell 2.5 per cent to $7.67.
Oil and gas producer and takeover target AWE dipped three cents, or 3.1 per cent, to 95.5 cents after it endorsed an offer from Japanese firm Mitsui & Co as the best deal available from its three suitors.
In the resources sector, global miner BHP Billiton lost 2.1 per cent to $30.15, Rio Tinto reversed 2.2 per cent to $76.50, and Fortescue Metals was steady at $4.99.
Wesfarmers led consumer stocks downward, dropping $1.99, or 4.5 per cent, to $42.16 after it said its first-half results would be hit by $1.3 billion in impairments, most of that sum against its underperforming UK hardware business with the balance on its struggling Target stores.
Engineering and mining services firm Downer EDI was down 26 cents, or 3.8 per cent, at $6.62.
Downer has flagged a goodwill impairment charge of $77 million on its mining operations after failing to renew two material contracts and delays in securing alternative business.
Among the major banks, Westpac backtracked 1.2 per cent to $31.31 as it recorded another $8.6 billion of mortgages switching from interest-only to principal and interest in the first quarter.
Commonwealth Bank was off 1.2 per cent at $79.80, National Australia Bank descended 1.2 per cent to $29.19, and ANZ gave away 1.3 per cent to $28.74.
Meanwhile, the Australian dollar has lost ground after the US dollar firmed following the better-than-expected US jobs and wages growth data.
The Aussie was trading at 79.34 US cents at 1630 AEDT on Monday, compared to 80.01 US cents on Friday.
ON THE ASX:
* The benchmark S&P/ASX200 closed down 95.2 points, or 1.56 per cent, at 6,026.2 points
* The broader All Ordinaries index ended down 101.4 points, or 1.63 per cent, at 6,128.4 points
* The SPI200 futures contract was down 110 points, or 1.81 per cent, at 5,961 points
* National turnover was 3.05 billion securities traded worth $4.9 billion
CURRENCY SNAPSHOT AT 1700 AEDT:
One Australian dollar buys:
* 79.37 US cents, from 80.01 on Friday
* 87.26 Japanese yen, from 87.74 yen
* 63.71 euro cents, from 64.03 euro cents
* 56.20 British pence, from 56.12 pence
* 108.63 NZ cents, from 108.55 cents
The spot price of gold in Sydney at 1700 AEDT was $US1,332.25 per fine ounce, from $US1,347.29 per fine ounce on Friday.
BOND SNAPSHOT AT 1630 AEDT:
* CGS 4.50 per cent April 2020, 2.0565pct, from 2.0041pct
* CGS 4.75pct April 2027, 2.8874pct, from 2.7837pct
Sydney Futures Exchange prices:
* March 2018 10-year bond futures contract at 97.065 (implying a yield of 2.935pct), from 97.17 (implying a yield of 2.83pct) on Friday
* March 2018 3-year bond futures contract at 97.77 (2.23pct), from 97.825 (2.175pct).
(*Bond market closes taken at 1630 AEDT previous local session; currency closes taken from 1700 AEDT previous local session)