The S&P/ASX 200 index fell 62 points, or by 1.2 per cent, to 4841.5, while the All Ordinaries 58 dropped points to 4896.9. Photo: Nic WalkerAustralian shares closed at fresh 2½-year lows on Wednesday after worries about Chinese growth and global commodity markets continued to weigh on investor sentiment, while investors dumped ANZ and BHP.
The market rose in the morning on the back of small gain on Wall Street on Tuesday night, but quickly fell back into negative territory where it stayed for the rest of the session.
The S&P/ASX 200 index fell 62 points, or 1.2 per cent, to 4841.5, while the All Ordinaries 58 dropped points to 4896.9.
Asian markets also fell as investors fretted about the continuing slide in oil prices, fearing that this could indicate a sharp slowdown in global growth rather than a supply surplus.
In afternoon trade, the Japanese Nikkei had slid by more than 3 per cent to its lowest in more than a year, while Hong Kong’s Hang Seng plunged 3.5 per cent and the Shanghai Composite dropped 1.3 per cent.
US crude is wallowing at its lowest since 2003 after the world’s energy watchdog warned the market could “drown in oversupply”. Brent crude lost another 59 cents to $US28.17 a barrel in Asian trade on Wednesday.
“People are still digesting what some of this volatility in China and commodity markets actually means,” Credit Suisse analyst Damien Boey said. China’s GDP figures released on Tuesday showed not only lower actual growth, but lower trend growth, he said.
“Both seem to be coming down,” he said. “It does suggest that the slowdown in China is deeper than what we’re used to, and it’s structural as well. More stimulus in China may not be enough at this stage to turn that whole giant around.”
Market heavyweight BHP Billiton hit a fresh 11-year low of $14.14 before closing 3.5 per cent lower at $14.21, falling hard after the miner posted a quarterly production report showing output falls in just about every commodity it produces.
The Big Australian also implied it may cut its dividend – ending a long-held policy to maintain or increase its payout every year – after chief executive Andrew Mackenzie said in the quarterly production report that it was focused on defending its investment-grade credit rating.
BHP cut its iron ore guidance by 10 million tonnes for the 2016 financial year on the back of interruptions to supply at the failed Samarco operation in Brazil.
The cut comes one day after rival miner Rio Tinto revealed weaker than expected iron ore production forecasts, and suggests a slowing of iron ore supply growth from the world’s biggest miners. Rio shed 2.8 per cent to $37.75. ANZ crashes
Among the banks, ANZ crashed 4.4 per cent to $23.50, after Morgan Stanley said the bank would cut its dividend per share in the second half of this year in the face of rising loan losses in Asia and lower-than-expected income from its global markets business.
Morgan Stanley analyst Richard Wiles, who is “underweight” on ANZ, said the bank would pay dividends of $1.55 a share for the full year, compared with $1.81 last year, a reduction of 14 per cent.
Commonwealth Bank lost 2 per cent to $77.61, National Australia Bank shed 1.1 per cent to $26.74 and Westpac was off 3.6 per cent to $30.06.
The mining and energy sectors were the hardest hit. Fortescue was down 4.6 per cent to $1.46, Woodside lost 2.7 per cent to $25.39, while Origin crashed 9.4 per cent to $3.46.
Telstra buoyed the market with a 0.4 per cent gain to $5.38 as did fellow heavyweight CSL with a1.9 per cent lift to $105.70. Extending recent gains, Woolworths put on 1 per cent to $23.58 while Wesfarmers lifted 0.9 per cent to $40.05.
Sydney Airport gained 2.5 per cent to $6.47 after announcing a record 39.7 million travellers passed through the airport over the past year, with visitors from Asia, the UK and the US flocking to Australia.
Total passenger numbers rose 3 per cent from 38.5 million in 2014, with international markets up 4.3 per cent to 13.7 million – including an 8.6 per cent surge in December – as airlines continue to grow their capacity in and out of the nation’s largest airport.
In other corporate news, Jobs website giant Seek said it had received a preliminary non-binding cash proposal to take its New-York listed Chinese online jobs business Zhaopin private.
The proposed buyers offered to buy out the minority shareholders and are expected to negotiate arrangements with Seek for the future management of Zhaopin, in which Seek has a 68 per cent ownership.
Seek lifted 0.7 per cent to $14.00.