The Australian share market 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 the 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.
The benchmark S&P/ASX200 index was down 171.1 points, or 4.0 per cent, at 4,105.4, while the broader All Ordinaries index was 183.2 points, or 4.21 per cent, weaker at 4,169.7.
On the ASX 24, derivatives traders sent the September share price index futures contract down 192 points at 4,050, with 82,572 contracts traded by 1645 AEST.
Only two of the top 200 ASX-listed companies posted gains, education provider Navitas and taxi fare service Cabcharge.
Every sector was down and the resources boom was forgotten, with the mining and energy sectors down by more than five per cent.
IG Markets strategist Cameron Peacock described the drop as a “bloodbath” that was the result of the anxiety about the European debt crisis spreading to Italy and Spain then colliding with America’s debt problems.
“It all came to a bit of a head, that’s why we’re seeing this global rout at the moment” he told AAP. “Everyone thought after the (US) debt ceiling issue was resolved that markets would move higher.
“All it really did was focus the markets on some of the structural problems in the US economy.”
Mr Peacock said the release of new employment numbers in the US overnight on Friday could calm investors if they were positive.
“No one knows what’s going to happen, anyone that pretends they do is kidding themselves,” he said.
“You get these panic days, people just liquidate portfolios indiscriminately and that’s why we’re seeing such broad-based losses.
“A lot of companies out there are in stellar financial condition and are doing very well, but the baby gets thrown out with the bathwater as they say.”
Mining giant Rio Tinto lost $4.58, or 5.98 per cent to $72, just a day after posting a record $7.3 billion half year underlying net profit.
The world’s biggest miner, BHP Billiton, closed down $1.94, or 4.84 per cent, at $38.12. Fortescue Metals gave up 39 cents, or 6.36 per cent, to $5.74. Gold miner Newcrest was down $1.45, or 3.57 per cent, at $39.20.
The price of gold in Sydney closed down $US4.49 at US1,657.61 per fine ounce, compared to US1,662.10 at close on Thursday. Among energy stocks, Woodside Petroleum plummeted $1.95, or 5.34 per cent, to $34.55. Santos fell 82 cents, or 6.65 per cent, to $11.52 and Origin Energy dropped 43 cents, or 3.05 per cent, to $13.66.
Banks and financials were down, too. ANZ lost 71 cents, or 3.58 per cent, to $19.10, National Australia Bank fell 90 cents to $21.77 and Westpac was down 50 cents at $19.27. Commonwealth Bank lost $1.29, or 2.71 per cent, to $46.26.
Telstra was down seven cents at $2.89. National turnover was 4.5 billion shares, worth $10 billion, with 63 shares up, 1,414 down and 171 steady.