The Australian share market hit a seven-month low after concerns about falling commodity prices and the slowdown in China fed into a continued sell-off in financial stocks.
The big four banks were among the biggest fallers on the ASX200 benchmark index as it dropped 1.2% to its lowest point since 20 January.
Markets across the Asia-Pacific region struggled all day before a sudden, late plunge in China’s main index aggravated the rout.
The Shanghai Composite lost 6.2% as investors drew in their horns and bet that demand in China would cool further.
The uncertainty in China, where the authorities last week moved to devalue the yuan on three successive days, also brought pain for the Australian dollar.
The Aussie was down 0.36% at US73.45c at 7pm on Tuesday.
The MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1% to its lowest since August 2013. Japan’s Nikkei dipped 0.3%. The FTSE100 followed suit in London when it opened on Tuesday morning and Wall Street was tipped to open lower later in the day.
“European equity markets are taking their cues from China, and traders’ suspicion is that the second largest economy in the world is heading for a hard landing,” said David Madden, market commentator at IG in London.
“The more the Chinese government intervenes, the more traders want to dump stock and head for the exit. The mood in London is that the party is over in China.”
In Australia, the financial sector’s fall was the biggest drag in the wake of the banks’ extensive capital raisings in the past weeks.
“The financial sector is holding things back the most, largely because of [Commonwealth Bank] which was expected to lose ground given its recent capital raising, but it is also trading ex-dividend today.”
CBA dropped $4.36, or 5.36%, ANZ shed 55c to $28.97, National Australia Bank fell 50c to $31.76 and Westpac was 28c weaker at $31.66.
Commodity prices remained under pressure from worries about slower growth in China, sending the big miners, BHP Billiton and Rio Tinto, lower.
Brent oil fell 0.7% to $48.35 per barrel, edging closer to a six-month intraday low of $48.24 touched last week. Copper fell to a fresh six-year low.
