Banks lead stocks to two-year low

AUSTRALIA’S benchmark share index has slumped to a near two-year low after investors again stormed the exits, stripping almost $40 billion from the value of the nation’s biggest companies.

The ASX 200 fell another 2.3 per cent yesterday after Wall Street racked-up its worst week since March amid lingering fears the trade stoush between the US and China will yet worsen. The ASX has now fallen 6.5 per cent in less than a month and 12.6 per cent since late August, shedding $230 billion in value in little more than three months. At 5552.5 points, the ASX 200 is at its lowest point since December 16, 2016.

The slide risks denting consumer confidence which, despite a string of retail collapses the past two years, has proven resilient in recent months according to polling by Westpac and the Melbourne Institute, and research by ANZ.

CommSec market analyst James Tao said that since US President Donald Trump and his Chinese counterpart Xi Jinping had tentatively agreed to a truce in their trade stoush, the positive sentiment had faded. That had been compounded by weaker than expected trade figures out of China and the arrest in Canada, at the request of the US, of a senior executive from Chinese electronics giant Huawei.

Shares in big banks were a particular source of weakness, all falling 2.5 per cent or more. ANZ was hardest hit, shedding 4.2 per cent. About $11 billion was stripped from the collective value of the banks.

Also hurting sentiment yesterday, the Organisation for Economic Co-operation and Development warned Australian house prices were still “elevated” and regulators should have a battle-plan ready in case there was a “hard landing” in the property market.

“This would put pressure on the whole economy,” it warned in its 128-page report, the first in-depth analysis of the Aussie economy published by the OECD since March last year.