Shares savaged in $50b wipeout

Wall Street shockwave hits ASX

ALMOST $ 50 billi on was wiped from the value of the nation’s biggest companies as a vicious sell-off on Wall Street hit our shores.

The key ASX 200 index fell 2.7 per cent yesterday in its second worst one-day result for the year.

The index, which tracks the nation’s 200 biggest listed companies, has lost about $90 billion this week and yesterday fell back through the 6000point barrier for the first time since June.

Key blue-chip stocks were hard hit with BHP Billiton down 3.8 per cent to $33.40, Rio Tinto off 3.3 per cent to $76.61, Coles and Bunnings owner Wesfarmers shedding 3.1 per cent to $47.45 and Woolworths 1.1 per cent lower at $27.82.

The Big Four banks had more than $10 billion wiped from their collective value with Commonwealth Bank shedding 2.9 per cent to $67, Westpac dropping 2.6 per cent to $26.29, National Australia Bank giving up 2.6 per cent to $26 and ANZ finishing 3.24 per cent lower at $26.01.

Tech stocks were hardest hit — mirroring the performance of their US rivals — with online payment provider AfterPay, logistics software company WiseTech Global and language and search data ser- vice provider Appen all taking double-digit share price falls.

Gold stocks were the best performers as investors sought shelter in the traditional store of value in tumultuous times.

The rout followed Wall Street suffering its biggest one-day plunge in eight months as investors reassess expectations of the pace of US interest rate hikes and fret about trade tensions with China.

Higher interest rates increase the cost of borrowing while the era of cheap money unleashed since the global financial crisis has pushed US share prices to record highs.

“US markets drive the world and we have been caught up in it,” InvestSmart chief market strategist Evan Lucas said yesterday.

Mr Lucas said investors had been betting interest rates in the US would not rise as quickly over the longer term as the US central bank, the Federal Reserve, has been warning.

Strong US economic data and bullish comments by Federal Reserve chairman Jerome Powell over the past week have finally convinced traders that the Fed will raise rates steadily over the next year.

“They [investors] are finally believing that actually, hang on a minute, they [US Federal Reserve] are going to do it,” Mr Lucas said.

“Finally the bond bull has broken, the bears have taken over and said no, you are wrong and this needs to be sold off and that has happened very quickly.”

Veteran fund manager Geoff Wilson said US stocks had been due for a correction but the breadth of the sell-off in the US was a worry.