black monday the asx erases 64 billion in value as chinese stocks collapse 8 5 per cent 1984232015

In the Australian share market the frontline indices fell over 4 per cent, the biggest one-day slump in four years, as stock markets around the world collapsed on the back of the massive 8.5 per cent plunge in the Shanghai Composite, the benchmark index for the Chinese stock markets.

The official organ of the Chinese media, Chinese state news agency Xinhua, dubbed the crash China's "Black Monday," while Reuters gave it the moniker “China’s great fall.” It was the worst fall for Chinese stocks since the Asian financial crisis of the 1990s.

Australian stocks lost about AU$64 billion in value, according to the ABC. Apart from the Chinese factor, mining stocks were under pressure following the 88 per cent drop in full-year net profits at Fortescue Metals Group Limited (ASX:FMG), the top loser (-14.62 per cent) on the S&P/ASX 200.

Indices and sectors

The benchmark S&P/ASX 200 fell 213.3 points, or 4.3 per cent, and closed at 5,001.3, while the broader All Ordinaries index was down 210.6 points, or 4.2 per cent, at 5,014.2.

The losing sectors included energy (-6.55 per cent), information technology (-4.95 per cent), financials (-4.83 per cent), materials (-4.82 per cent), consumer discretionary (-3.64 per cent) and industrials (-3.34 per cent).

For the third successive session, not a single sector managed to close in positive territory.

Stocks

Energy stocks were the biggest losers on Monday following the fall in US crude oil prices below US$40 per barrel. Woodside Petroleum Limited (ASX:WPL) lost nearly 5 per cent to AU$30.00, Beach Energy Ltd (ASX:BPT) was down 5.56 per cent to AU$0.68, Oil Search Limited (ASX:OSH) fell 5.68 per cent to AU$5.81, Origin Energy Ltd (ASX:ORG) slumped 5.79 per cent to AU$7.98, and Santos Ltd (ASX:STO), the third biggest loser on the S&P/ASX 200, crashed over 11 per cent to AU$4.97.

The major banks lost between four and 6 per cent. Commonwealth Bank of Australia (ASX:CBA) ended lower by 4.13 per cent to AU$72.47, Westpac Banking Corp (ASX:WBC) slumped 6.12 per cent to AU$29.45, National Australia Bank Ltd. (ASX:NAB) was down 4.6 per cent to AU$29.71 and Australia and New Zealand Banking Group (ASX:ANZ) fell 5.05 per cent to AU$26.91. Senex Energy Ltd (ASX:SXY), the second-biggest loser on the S&P/ASX 200, crashed 13.79 per cent to AU$0.125.

Miners too were on the ropes following fresh concerns on Chinese growth. Fortescue Metals Group Limited (ASX:FMG), the biggest loser on the S&P/ASX 200, slumped nearly 15 per cent to AU$1.64 and Atlas Iron Limited (ASX:AGO) crashed 12.50 per cent to AU$0.02. BHP Billiton Limited (ASX:BHP) dipped 5.02 per cent to AU$22.89 and Rio Tinto Limited (ASX:RIO) was down 5.15 per cent to AU$46.97.

In retailers and supermarkets, Woolworths Limited (ASX:WOW) fell 4.10 per cent to AU$25.29, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was down 1.86 per cent to AU$40.05, Caltex Australia Limited (ASX:CTX) slumped 6.18 per cent to AU$29.72, Myer Holdings Ltd (ASX:MYR) fell 2.81 per cent to AU$1.21 and Metcash Limited (ASX:MTS) fell 1.18 per cent to AU$1.05.

BlueScope Steel Limited (ASX:BSL), the top gainer on the S&P/ASX 200, continued on its path of recovery and reported full-year earnings before interest and tax of AU$301.8 million, up 14 per cent, and a 7 per cent jump in revenues to AU$8.57 billion.

Economic news, currency and market outlook

Stock markets across the world hit panic selling buttons on Monday after Chinese stocks went into free-fall and lost nearly 9 per cent. Investors on Chinese stock markets unloaded shares after apparently concluding that the authorities lacked the ability to prop up the markets, particularly as no worthwhile easing measures were announced over the weekend. Given the latest data on the massive slowdown in Chinese manufacturing, and the recent yuan devaluations, investors concluded that a lot more was wrong with the Chinese economy than indicated by official figures.

On Wall Street Monday, the Dow Jones Industrial Average fell over 1000 points, or nearly 7 per cent at the open in response to the global sell-off earlier through the day. However, much of those losses were recouped by the time of the closing bell in a trading session marked by high volatility. The Dow Jones closed down 588.4 points, or 3.57 percent, at 15,871.35, the S&P 500 lost 77.68 points, or 3.94 percent, to 1,893.21, and the Nasdaq Composite dropped 179.79 points, or 3.82 percent, to 4,526.25. According to Reuters, all these three indices are now in a correction mode.

The Australian dollar was impacted negatively by the global turmoil in stocks and commodities and, at one time fell as low as 70.44 US cents, according to the Business Spectator. At 07:00 am this morning (AEST) the Australian dollar was trading at 71.59 US cents, down from 72.36 US cents on Monday.

The Australian stock market is likely to open lower by about 4 per cent given that at 6.45am (AEST) on Tuesday the September ASX SPI200 Index (AP) Future contract was down 191 points at 4,759.