Australian shares tumbled to their lowest close in more than two years on Wednesday as concerns about the economic outlook for top trading partner China sent commodity prices lower, hitting sentiment across the board. The S&P/ASX 200 index finished down 2.1 percent or 105.5 points at 4,998.1, its lowest since July 2013. The benchmark has fallen 7.6 percent so far this year.
New Zealand's benchmark NZX 50 index declined 42.5 points or 0.7 percent to finish the session at 5,654.3. Activity in China's factory sector fell to its weakest level in 6-1/2 years as domestic and export demand continued to slump, a private survey showed. Overnight, copper prices slid 3.6 percent, while oil was off 2 percent and iron ore dipped 1.8 percent as the Chinese government's efforts to stimulate growth failed to calm nerves in global markets.
"The conviction to buy the market is falling through the floor," said IG Markets strategist Evan Lucas. "It's at a point where the US is going to stop giving you money (via quantitative easing), maybe in Europe the whole stimulus may not be working, and from an Australian-centric point of view, what is going on with China?" Mining heavyweight BHP Billiton was down nearly 4 percent, near a seven-year low hit in August, as plans to raise money with hybrid securities added to unease over its exposure to faltering commodities demand.
Rival Rio Tinto dropped 2.6 percent while BHP spin-off South32 tumbled 5.3 percent. Energy stocks also fell in step with the oil price, with Woodside Petroleum off 2.5 percent while its takeover target Oil Search lost 0.9 percent, propped up by the prospect of a buyout. Among banks, Commonwealth Bank of Australia and Westpac Banking Corp both shed 2.7 percent while Australia and New Zealand Banking Group and National Australia Bank declined 2 percent each. Retailers fared no better, with supermarket firm Woolworths sliding 2 percent and Wesfarmers, which owns rival Coles, falling 1.8 percent.