ASX takes huge $63b hit

Worst day in 18 months amid global meltdown

THE Australian share market has shed more than $63 billion in its worst day in 18 months amid a global market meltdown as investors fear a recession is near.

The benchmark S&P/ ASX200 index yesterday tumbled 187.8 points, or 2.85 per cent, to 6408.1 points, while the broader All Ordinaries shed 186.7 points, or 2.8 per cent, to 6490.8 points.

It was the market’s worse day since February 6, 2018, when the ASX200 lost 192.9 points, or 3.2 per cent.

The Aussie dollar was buying 67.83 US cents from 67.82 US cents on Wednesday.

The Aussie bourse followed the lead of Wall Street, where the Dow Jones Industrial Average had finished down 3.05 per cent – its biggest one-day point drop since October – while the S&P 500 was down 2.93 per cent and the techheavy Nasdaq Composite was down 3.02 per cent.

The US Treasury yield curve temporarily inverted for the first time since June 2007 – with two-year Treasury yields surpassing those of 10-year bonds – in a development that has often preceded recessions.

Meantime, Telstra has reported a 40 per cent fall in fullyear profit to $2.15 billion and flagged another earnings squeeze next year as construction of the national broadband network nears completion.

Profit for the 12 months to June 30 fell from $3.59 billion a year ago on $800 million in previously announced restructuring costs and a total of $600 million in earnings lost to the Federal Governmentowned NBN.

The company cut its final dividend to 8.0 cents per share from 11 cents a year ago, with its full-year payout down to 16.0 cents from 22.0 cents in FY18.

Telstra shares fell by as much as 2.2 per cent yesterday before closing down 1.78 per cent at $3.87, having nudged a near two-year high of $4.00 last week.

Nonetheless, the stock has still climbed more than 40 per cent since its T22 restructuring program was announced in June last year. Telstra said yesterday the NBN had absorbed about $1.7 billion of earnings since FY16 and it expected to lose as much again by the time customer migration was complete.

The company said earnings lost to the NBN would increase to between $800 million and $1 billion in FY20.

“We will continue to advocate for a reduction in NBN wholesale prices to help ensure the long-term sustainability of the industry,” the company said in its letter to shareholders.