The biggest one day loss since the GFC has hit the ASX

August 5, 2011 – SYDNEY – AUSTRALIAN shares slumped by four per cent to its biggest one-day loss since the height of the global financial crisis almost three years ago. fresh concerns that United States could be headed back into recession and fears that Europe’s debt woes could be spreading to Italy and Spain sent investors to exits. The fall wiped almost $60 billion from the value of Australian stocks on Friday and took the cumulative loss to around $100 billion over the past week. Local traders followed the overnight lead of the United States, where the Dow Jones Industrial Average sank 4.3 per cent, or 512 points, to its worst one-day drop in more than two years. Australian stocks closed at their lowest level since July 2009.It was the biggest one-day percentage fall since November 20, 2008. Australia’s central bank slashed its 2011 growth forecast Friday from 4.25 percent to 3.25 percent, warning the coal industry’s recovery from floods was slower than hoped and consumer spending was cooling. The Reserve Bank of Australia, however, did not indicate whether it would increase interest rates despite inflation continuing to stay relatively high. “A little more than half of this downward revision reflects the slower-than-expected recovery in the Queensland coal industry, with most of the remainder reflecting slower expected growth in consumption,” the bank said. Downside risks to the global economy had also risen in recent months, according to the Reserve Bank of Australia, with financial markets rattled by debt worries in America and Europe and overheating in Asia. The stark warnings came as global markets suffered massive selling pressure, including a four percent loss in Sydney afternoon trade. The ASX200 opened at its lowest point since July 2009, mirroring the steep correction on Wall Street. –Daily Telegraph

Trillions evaporate: More than $2.5 trillion have been wiped off the value of world stocks this week on mounting concerns the global economy is heading towards another recession and Italy and Spain are being engulfed by the euro zone sovereign debt crisis. The sum wiped off the MSCI All-Country World Index is almost equivalent to the size of the entire French economy. The MSCI All-Country World Index is down 8.6 percent this week, on track for its biggest weekly percentage fall since November 2008. The U.S. S&P 500 index alone has lost more than $840 billion from its market capitalization this week, while European equities measured by the MSCI Europe have lost more than $817 billion. –Money News

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