Market crushed: $25 billion wiped off

ASX drops 2.2%, reversing Tuesday's gains

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Following Monday's large fall, yesterday appeared to signal a return to 'onwards and upwards' for the Australian share market. Unfortunately, it wasn't to be, with the ASX crashing today.

The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has now wiped out most if not all of yesterday's gains, losing $25 billion in value and sliding more than 2% in mid-afternoon trading. The falls are have come in every sector, and it's a sea of red out there.

Amongst the top 20 stocks, Wesfarmers Limited (ASX:WES) and BHP Billiton (ASX:BHP) were the biggest losers falling 3.4% while Rio Tinto Limited (ASX:RIO) and Macquarie Group (ASX:MQG) were both down 3.3%.

The reasons for falls appear to be many. Fears of a credit crunch in China are rising amid reports the authorities were trying to quash any negative reporting, in an effort to stabilise the financial markets. China's official purchasing managers' index data came out today and dropped to 53.9 in June, showing the country's manufacturing growth has had the brakes applied.

Locally, weak retail sales numbers in Australia suggest that our retailers are still struggling, as consumers keep their hands in their pockets, despite record low interest rates. Activity in the services sector fell for the 17th consecutive month, as construction and manufacturing were flat, while mining investment slowed.

Some commentators have suggested that the Reserve Bank hasn't done enough to stimulate the economy, and will need to cut rates further to entice consumers to spend. So far they appear to be right. With the mining boom tapering off, the central bank's hopes that other sectors would step up to take its place in generating economic growth appear to be nothing more than hope.

Foolish takeaway

While the falling Australian dollar should help our major export industries, it doesn't appear to be having much effect on our economy yet.

In the market for high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool writer/analyst Mike King owns shares in BHP.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »