The Australian share market is stuck in a rut and investors are fearing that its recent pullback may be the beginning of something much larger.
In what has been a sea of red the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has been stuck in a downward spiral over the last three days, having dropped 3.7% in that time. It's down 75 points or 1.3% today after it endured its worst loss of the year on Wednesday, dropping more than 1.8%.
The falls have come on the back of negative international leads including weak US gross domestic product (GDP) numbers overnight, which revealed that the US economy expanded by just 0.2% in the first quarter.
Our local telecommunications sector is also on the ropes after TPG Telecom Ltd (ASX: TPM) shockingly increased its stake in Amcom Telecommunications Limited (ASX: AMM) to build a blocking stake against Vocus Communications Limited's (ASX: VOC) merger proposal. The three stocks are trading 1.7%, 14.8% and 2.4% lower as a result while Telstra Corporation Ltd (ASX: TLS) is also down 1.8%.
Meanwhile, the rally in iron ore prices also came to an abrupt end during the most recent session, ending a nine-day surge as it plummeted 4.6%, according to figures from the Metal Bulletin. Fortescue Metals Group Limited (ASX: FMG), Rio Tinto Limited (ASX: RIO) and BC Iron Limited (ASX: BCI) are all paying the price and are trading 7.1%, 1.3% and 7.8% lower as a result.
However, it is the nation's Big Four banks doing most of the damage with the market cooling on the prospect of an official interest rate cut next week. While each of the banks have fallen in excess of 2%, Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) have been hit the hardest and are trading 2.8% and 2.2% lower, respectively.
What would YOU do if the market crashed tomorrow?
One day of heavy losses is enough to make investors nervous, but three days in a row can drive people crazy. Indeed, many have given up on the prospect of the ASX 200 climbing beyond the 6,000 point barrier, but others are becoming increasingly concerned that we could be on the verge of a significant pullback, or worse, a market crash.
