The Australian sharemarket was sold off on heavy volume to an eight-week low, with just miners dodging the deluge, as weak domestic growth fundamentals and soaring global borrowing costs prompted a wave of profit taking.
The S&P/ASX 200 index opened slightly lower in-line with the slightly weaker finish on Wall Street last night, but selling accelerated throughout the session to leave the index 75.7 points, or 1.44 per cent, down at 5198 points, the day’s low.
Qantas’ request for government aid and its announcement of 1000 job losses knocked fragile sentiment and sent the major banks sharply lower.
Last night in the US good economic news was bad for stocks and the forecast beating 215,000 rise in the ADP private payroll number hit stocks before a late rally on weak ISM services data lifted the S&P 500 index to a marginally weaker finish.
Westpac economist Elliott Clarke said analysis of positive manufacturing ISM data released on Tuesday was that market participants and policy makers alike would be well advised to remain cautious on the outlook for the real economy which did not reflect the positive trend.
“Main Street remains under considerable pressure, limiting growth opportunities in this household centric economy,” he said.
The Australian dipped to a low of US89.99¢ last night before bouncing to US90.40¢, but Australian government 10-year bonds yields leapt 10.4 points to a fresh two-year high of 4.41 per cent as US benchmark 10-years jumped 7 points to a three-month high of 2.85 per cent.
The Australian trade deficit widened to $529 billion in October from $271 million as exports eased 0.1 per cent and imports rose 0.8 per cent.
“With further fiscal consolidation likely to be announced in coming weeks, the prospect of further increases in the unemployment rate and the outlook of weaker nominal income growth as the terms of trade enters the next leg of its longer term decline in 2014 we continue to believe that the RBA will ease interest rates in 1Q14, most likely at the March meeting,” Goldman Sachs analysts said.
The Shanghai composite index was off 0.1 per cent at the close of the ASX as fears of a cash drain from the resumption of initial public offerings weighed on sentiment.
In Tokyo the Nikkei index was off 0.4 per cent.
Gold bounced $US23 to $US1237 an ounce and copper pared its overnight 2 per cent rally, sliding 0.7 per cent to $US7040 a tonne. Spot iron ore climbed 0ne per cent to $US139.70 a tonne.
CMC Markets chief market analyst Ric Spooner the market appeared to have built up downside momentum with yield stocks - above-average dividend payers - falling most after strong gains this year.
"We are just seeing a bit of profit taking I think, book squaring with markets positioning for the jobs figure (non-farm payrolls) in the US tomorrow night,” he told AAP.
The ASX200 index has fallen four out of the last five sessions.
Every stock among the top 20 and 48 of the top 50 on the bourse fell.
Yield stocks to fall included Woolworths, which dropped 59 cents, or 1.8 per cent, to $32.82 and Wesfarmers, which gave up 54 cents to close at $41.76.
The major banks posted heavy losses, with Westpac the biggest loser dropping 86 cents, or 2.7 per cent, to $31.49, Commonwealth sagging $1.30 to $75.50, ANZ retreating 57 cents to $31.19 and National Australia Bank dumped 72 cents to $33.66.
Qantas on Thursday flagged a half-year pre-tax loss of $250 million to $300 million, and said it will axe 1,000 jobs.
Its shares closed 13.5 cents or 11.2 per cent, lower at $1.07, with 80 million shares changing hands.
The Australian market overall was weaker following overnight falls on overseas markets.
Resources stocks did slightly better due to higher commodity prices and the lower Australian dollar, which helped some other stocks.
BHP Billiton dropped two cents to $36.78 and Fortescue added six cents at $5.69.
The broader All Ordinaries index was down 70.6 points, or 1.34 per cent, at 5196.9 points.
The December share price index futures contract was 66 points lower at 5211 points, with 32,296 contracts traded.
National turnover was 2.0 billion securities worth $5.3 billion.