PERTH: The rout on the Australian sharemarket has eased, with the benchmark index more than 2 per cent higher, after opening more than 1 per cent weaker on continued concerns about China’s economic strength.
At 11.45am (AEST) the benchmark index was 2.12 per cent higher at 5107.1 points.
This is a sharp swing from the 10.15am (AEST) official market open, when the S&P/ASX200 index fell 51.61 points, or 1.03 per cent, to 4949.7 points, while the broader All Ordinaries lost 57.81 points, or 1.15 per cent, to 4956.4 points.
In earlier trade the benchmark index touched as low as 4928.3 points, the first time it has traded below 5000 since July 2013, though this morning’s sell-off was not as severe as some had been expecting, with many investors bracing for declines of up to 4 per cent at the open.
Overnight on Wall Street the Dow dropped 588 points, or 3.6 per cent, on further concern over China’s slowing economy. Meanwhile, London’s FTSE 100 lost 4.7 per cent and Frankfurt’s DAX shed 4.7 per cent.
Yesterday in China, the Hang Seng fell 5.2 per cent while Shanghai plummeted 8.8 per cent.
Commodities have also been hit in recent trade with October delivery WTI oil down $US2.21 to finish below the $US40 mark, at $US38.24, and iron ore shedding 4.1 per cent to $US53.30. That means Australia’s resources companies can expect to have a bad day on the sharemarket.
CMC chief market strategist Michael McCarthy said Australian investors were in for another torrid day of selling after share prices were slaughtered in overnight trading.
“The drivers of the selling are not simple. Some analysts are pointing to a stronger USD threatening fragile emerging market economies, others point to weaker China manufacturing data and a 36 per cent fall in the Shanghai composite index,” he said.Mr McCarthy added that the nebulous nature of the selling makes predicting a target point for markets very difficult.
