Local stock markets encountered the worst fall over the course of a single day since 1987, with close to $95 billion disappearing from the market today alone.
The share-market fell in value by more than $190 billion during the week as central banks and local authorities across the globe battled to control what has been described as the worst financial crisis since the Great Depression.
The significant sell-up in local shares came as fears of a global recession sparked drops in Asian markets and on Wall Street, where the S&P 500 stock index fell nearly 8.3 per cent overnight hitting its lowest point in 3 years, marking the worst percentage fall since the crash of 1987.
The benchmark index finished down 360.2 points to 3960.7. The All Ordinaries closed down 351.8 points at 3939.5, also the biggest fall since 1987 when the stock market plummeted 25%.
The Dow Jones Industrial Average lost almost 679 points, or 7.3 per cent overnight, placing it below 9000 points for the first time over 5 years.
Traders expect to see further savage selling tonight, with the Dow futures down more than 200 points.
All sectors on the local market have been affected, although energy companies have reportedly been hit the hardest, with investors fearing oil demands will drop in a fragile global economy.
The market is down for the week by 15.6 per cent, making it the worst performance for a single week since 1987.
Ric Klusman Aequs Securities institutional dealer said the confidence of investors in global financial markets had evaporated.
“The market really doesn’t want to go anywhere. There’s a complete lack of confidence in anything at the moment,”said Mr Klusman.
Singapore declared that economic growth had fallen during the third quarter, due to a reduction in the previous quarter, which put Japan’s Nikkei 225 down by around 10% and pushing the city state into recession.
Singapore's announcement triggered massive selling on Hong Kong’s Hang Seng Index, which was down more than 7%, resulting in a butterfly effect on the rest of the region and following negative trend.
head of sales trading at ABN Amro, Justin Gallagher said: “People are concerned that if it’s happening in Asia, then China will disappoint on the downside when they report their GDP numbers next week.”
Investors have become increasingly negative about the future of global economic situation despite world-wide central banks acting together to cut interest rates in a move that was hoped would help to boost confidence and improve credit markets.
Despite the British Government injecting a potential $1 trillion into major banks and reports of the US Treasury considering to part nationalize its lenders, investors are still unconvinced that things will get better before they get worse, and believe a global recession is upon us.
“People don’t believe the US Government have got enough cash to guarantee everything,’’ said Mr Klusman.
With the mass fluctuation in share prices, more and more people are converting their shares into cash and investing in high interest bank accounts and savings accounts.
