Close Australian shares shed another $30 billion in value in their biggest one-day drop in two months as worries about the global and local economy sent prices of miners and banks into a slump.
The benchmark S&P/ASX200 index ended the day down 100.8 points, or 2.3 per cent, to 4332.9 points - its lowest level since August 25 last year.
The broader All Ordinaries index fared just as poorly, dropping 102 points, or 2.3 per cent to 4408.3 points.
Today's slide brings the two-day market loss to about $50 billion after the main indexes fell 1.7 per cent yesterday.
Poor retail sales figures for June added to the negative sentiment, with turnover easing 0.1 per cent for the month, the Australian Bureau of Statistics reported minutes ago. Economists had been tipping a 0.4 per cent increase.
Investors looked past yesterday's agreement in the US to lift the nation's debt ceiling and avoid a default to focus instead on the gloomy outlook for most of the world's major economies.
Stocks fell in most Asian markets, with Japan's Nikkei 225 off 2.1 per cent, Hong Kong's Hang Seng down about 2 per cent and South Korea's Kospi index 2.6 per cent lower. Mainland Chinese markets were mixed.
need2know
Australian dollar slides to $1.073 US cents, 75.7 euro cents
Asian stocks fall on global concerns
Spot gold was hovering at $US1662 an ounce
Oil futures were down to $US93 a barrel
Dow share futures were up 1 point at 11,805
The Australian dollar also continued its slide, dropping below $US1.07 after the retail figures, almost three US cents lower than its exchange rate at midday yesterday. It later clawed back some of the losses to trade recently at $US1.073.
The dim sentiment is also reflected in interest rate futures, with markets now gauging the chance of an interest rate cut when the RBA board next meets on September 6 as a better-than-even chance. In one year's time, investors are betting that the central will have cut interest rates three times, bring them to 4 per cent from 4.75 per cent now.
Among the major share sub-indexes, the materials index was down 2.7 per cent, energy stocks lost 2.5 per cent and financials fell 2.2 per cent. Gold stocks bucked the trend, rising 1.5 per cent as the metal hit fresh US-dollar highs.
Also on the economic front, activity in the services sector was falling at a slightly slower rate in July, as the outlook for interest rates and the global economy remains uncertain, shows a new private sector survey.
'Ugly'
IG Markets research analyst Ben Potter said the local market had endured a ‘‘pretty ugly’’ day’s trading.
‘‘It seems the (US) debt issue has been forgotten about already and everyone’s focusing on the terrible growth data (in the US) - we had GDP on Friday, manufacturing on Monday and last night, personal spending dropped for the first time in two years,'' Mr Potter said.
‘‘So everyone is seriously questioning whether the US economy is actually recovering at all and if it’s headed for a double-dip recession.’’
Mr Potter said disappointing Australian retail figures on Wednesday had affected the Australian dollar but had little effect on the share market. He said the outlook for markets was cloudy, but given that US markets had been down for eight days in row, it could be time for a relief rally.
BHP, Rio retreat
In the resources sector, global miner BHP Billiton lost $1.42, or 3.42 per cent, to $40.15, while Rio Tinto retreated $2.45, or 3.06 per cent, to $77.60.
Among the major banks, National Australia Bank lost 77 cents to $23.20, Westpac shed 27 cents to $20.10, ANZ was off 53 cents at $20.29 and the Commonwealth Bank fell 87 cents to $48.55.
In the gold sector, Western Australian miner Ramelius Resources was eight cents higher at $1.495 after it forecast a more than four-fold rise in full-year gross profit on the back of soaring production and gold prices.
At 1627 AEST, the price of gold in Sydney was $US1,662.30 per fine ounce, up $US37.33 from $US1,624.97 at close on Tuesday.
Residential developer AVJennings was steady at 45 cents after it posted a 34 per cent lift in annual profit, but has flagged softening market conditions ahead.
Preliminary national turnover was 2.35 billion shares worth $6.39 billion, with 921 stocks down, 212 up and 333 unchanged.
On the ASX 24 at 1615 AEST, the September share price index futures contract had dumped 102 points to 4,293 points, with 46,355 contracts traded.
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