The Australian stock market posted its biggest one-day fall in six years today following falls on Wall Street, which is still spooked by the rout in the US sub-prime mortgage sector.
The largest fall since the September 2001 US terrorist attacks wiped almost $53 billion from the value of the Australian market, rattling investor confidence and eroding superannuation-linked gains.
The benchmark S&P/ASX200 index was 229.6 points lower at 5936, while the all ordinaries retreated 222.5 points to 5965.2.
At the close of day trading on the Sydney Futures Exchange, the September share price index contract was 217 points lower at 5934, on a volume of 36,791 contracts.
MFS Ltd chief executive Guy Hutchings said it would take time for the market to settle, with more volatility was expected next week as investors anticipated further effects from the credit crisis.
"Cash is king at present, with the market continuing to respond very directly to offshore volatility as the fallout from sub-prime credit crisis spreads," Mr Hutchings said.
"Investors are clearly spooked by the extent of loses in the US and Europe overnight and there were no real positions of safety, with losses across the board.
"The fact that the local market fell away quite dramatically at the end of the session implies traders did not want to hold stocks over the weekend, which indicates the nervousness is likely continue well into next week.
Treasurer Peter Costello moved to hose down concerns of a market collapse in Australia, noting the market was undergoing a correction, coming off a very high base.
The big miners were weaker, with BHP Billiton losing $2.00 to $34.66 and rival Rio Tinto Ltd shedding $3.49 to $84.77.
The spot price of gold was lower and it closed Sydney trading at $US663.80 an ounce, down $9.70 from yesterday's close.
The big banks were weaker, with National Australia Bank losing $1.28 to $38.22, ANZ dropping 75 cents to $28.22, the Commonwealth Bank giving up $1.45 to $53.35 and Westpac retreating 79 cents to $25.80.
Reckson New York Property Trust dipped three cents to $1.095 after reporting after first-half net profit to $46.65 million, with the US office block investor indicating the downturn in the sub-prime mortgage industry would not have any material effect on its portfolio.
Flight Centre lost $1.60 to $17.70 despite the company reaffirming its profit expectations for 2006/07 and estimating a lift in the value of its transactions this financial year by up to 15 per cent.
The retailers were weaker, with Woolworths losing 80 cents to $26.36, Coles dropping 82 cents to $13.87, Harvey Norman shedding 19 cents to $5.04 and David Jones retreating 35 cents to $4.91.
The media sector was weaker, with News Corp falling 84 cents to $25.93, its non-voting shares dropping 10 cents to $24.45, PBL dipping 38 cents to $18.08 and Fairfax losing 12 cents to $4.60.
The energy sector was weaker, with Woodside dropping $1.91 to $41.70, Santos losing 93 cents to $11.78 and Oil Search giving up 26 cents to $3.41.
Energy utility Alinta lost 34 cents to $14.54 despite posting a 20 per cent increase in first half net profit to $96.5 million.
Empire Oil & Gas was the most traded stock on the market today with 577 million shares changing hands, collectively worth $13.6 million.
The oil and gas explorer added 0.3 cents to 2.5 cents.
Market turnover reached 2.62 billion worth $8.91 billion, with 225 stocks moving up, 1180 down and 233 unchanged.
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