Australian stocks lose $22 bn as slowdown fears grip investors
05 Jun 2012
Around $22 billion were wiped off the Australian share market after investors, spooked by the serious slowdown in global growth, liquidated their positions globally, with the selloff pushing the S&P/ASX 200 Index below the key 4000-point mark.
As the Australian Reserve Bank prepares for a crucial rates meeting today, expectations of investors' loss of confidence in the economy could see the bank go for a greater than expected 25 basis points cut. The benchmark index was down 78.9 points, or 1.9 per cent, to 3985.
In addition to the woes of $110 billion wiped from the market last month, the share market closed at its lowest since November, as weak economic data continued to flow in from China, Britain and the US in recent days.
The Australian market is down 10 per cent from its earlier highs in the year, in what is seen as a technical correction, and is now over 40 per cent below its highs of 2007.
The dollar tested a new low below 96.3¢ after shedding 6¢ last month on mounting fears that Australia's commodities boom had peaked.
According to Kapstream Capital managing director Nick Maroutsos who spoke to Bloomberg, people were more concerned about a return of their capital as against a return on their capital.
