PERTH: The Australian sharemarket fell sharply on Friday as nervous local investors mirrored their European and US counterparts following a weaker-than-expected European stimulus update.
At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 76.1 points, or 1.46 per cent, at 5151.6, while the broader All Ordinaries index was off 75.2 points, or 1.43 per cent, at 5201.5.
European Central Bank chairman Mario Draghi sent a wave of negativity through global markets when he announced a shallower deposit rate cut than expected for the eurozone and no increase to the current €60 billion monthly bond purchasing program.
IG chief market strategist Chris Weston said the role of central banks as a support mechanism seemed to be dissipating.
“That seems to be the case now with the ECB, who undoubtedly have lost some credibility, or at least that is the line from most economists who were all calling for a shock and awe type of approach,” Mr Weston said.
European markets quickly turned a 0.5 per cent rise into a 3 per cent fall and Wall Street dropped around 1.5 per cent as Federal Reserve chair Janet Yellen hinted even more firmly towards America’s first interest rate hike in seven years coming in mid-December.
The Australian benchmark fall, the worst since November 9, pushed the local market 1 per cent lower for the week — the fifth time in six weeks it has declined over the five days. The slide marked a negative start to December, traditionally the third best month on the ASX behind April and July.
