The Australian stock market has seen huge losses, leading the Sydney Morning Herald Sydney, Australia is 15 hours ahead of New York City. By 1:30 PM Sydney time, the S&P/ASX200 index had experienced a drop of 336.6 points to 3,984.3, representing 7.8% of its value, before rebounding to 4,025.7. That drop of 295.2 points represents a 5.8% decline in value.
For the week, the stock index is off 14%, which is the worst performance in 21 years. In the past year, the value of the stocks on the S&P/ASX200 index has lost a collective A$600 billion in value, and the total value of the index has fallen below A$1 trillion.
In related news, the Nikkei 225 in Japan had declined by 11% while South Korea’s Kospi index had declined by 9% and Singapore’s Straits Times index was down by 7%
Australian financial experts are blaming the losses to sell-offs related to investors’ fear that the economic collapse that started on Wall St. and has since affected the markets in Asia, Australasia, and Europe like dominoes will not be stopped by the steps taken by national governments. The US and European central banks have implemented coordinated rate cuts to try to free up the frozen credit markets.
The Sydney Morning Herald quoted James McGlew of Argonaut Securities as saying, “No one who is alive has seen anything like this before.”
McGlew blamed the bath on the Australian market on the steep drop in the Dow near the end of the Thursday trading session. The Dow dropped on new that Standard & Poor’s was considered downgrading American automakers Ford and General Motors.
The Dow was down by only a moderate amount for most of Thursday’s trading until a massive sell-off began around 3 PM New York time. The rout was triggered by the news of the downgrading of Ford and GM. The massive sell-off was attributed to mutual funds selling off stocks to raise cash for the following day, to pay off panicky investors cashing out of their funds.
When the bell rang on the New York Stock Exchange, bringing the trading day to an end, the Dow has lost 679 points, equivalent to 7.3% of its value, closing below 8,579.18. It is the first time that the Dow has gone beneath the 9,000 point threshold in five years. The total volume was a New York Stock Exchange. Only 87 stocks of the total of 1,843 stocks traded by the NYSE experienced gains; all other stocks declined.
Although he believes that the bottom of the market might be in sight if investors can get over their fears, McGlew told the Morning Herald, “This is the greatest economic shock that has happened to capitalism.” hub peak
New York Times, “Stocks Plunge Again; Dow Under 8,600″
This news was published on August 21, 2012