Australia’s share market has recorded its steepest fall since February as falling iron ore prices ruined miners and Chinese property giant Evergrande teetered on collapse.
The ASX closed lower by 2.1 per cent on Monday as market forces mostly from China worked against investors.
BHP shares closed lower by more than four per cent in one example of the iron ore price impact. Fortescue and Rio Tinto shed more than three per cent.
Iron ore earlier tumbled to $US101 per tonne as Chinese steel mills keep easing steelmaking after a government environmental edict. The commodity fetched more than $US200 per tonne earlier this year.
Almost all share categories were down and Shaw and Partners chief investment officer Martin Crabb said Evergrande had much to do with it.
“It’s a trainwreck and has implications across the region,” he said.
It was revealed earlier this month the company owes about $US305 billion ($A421 billion) and is struggling to repay.
Shares in Evergrande on Hong Kong’s Hang Seng index dropped by as much as 19 per cent earlier.
Mr Crabb also cited a Transurban share sale as likely having an effect on the wider market.
A Transurban joint venture is paying more than $11 billion for the NSW government’s 49 per cent stake in Sydney toll road WestConnex.
Transurban will help pay by selling securities to existing security owners.
Mr Crabb noted the offer price of $13 per security was a discount on the last traded price on Friday of $14.18.
He was sure super funds and others would have pounced.
“They would have been selling other stock to raise cash to take up that offer,” he said.
“So that has weighed on market sentiment.”
The benchmark S&P/ASX200 index closed lower by 155.5 points, or 2.1 per cent, to 7248.2.
The All Ordinaries closed down by 165 points, or 2.14 per cent, to 7537.9.
This week there is a raft of central bank meetings overseas. The most closely watched will be the US Federal Open Markets Committee.
Video: ASX 200 drops amid falling iron ore prices (Sky News Australia)
Investors will see whether the committee signals when the US Federal Reserve might start winding up its bond buying.
Central banks around the world have given enormous support to economies during the pandemic through measures such as buying bonds.
In Australia, the Reserve Bank will on Tuesday publish the minutes of its recent meeting. The board extended bond buying due to lockdown damage to the economy.
On the ASX, the big four banks each declined by about two per cent.
Victorian electricity operator AusNet surged after Brookfield Asset Management improved its takeover offer.
Brookfield has offered to buy all shares for $2.50 each after first offering $2.35 per share last month.
AusNet will allow Brookfield staff to examine its financials to help decide whether to pursue the bid.
AusNet shares closed higher by 19.19 per cent to $2.36.
Property trust Charter Hall is leading a group buying all the securities in ALE Property Group.
Charter Hall is offering $5.68 per stapled security in the pub property owner.
ALE securities on the ASX closed up 20.85 per cent to $5.68.
Charter Hall shares were down 3.03 per cent to $5.12.
Energy providers were the worst-performing category after materials. Santos and Oil Search shares lost more than three per cent.
The Australian dollar was buying 72.31 US cents at 1724 AEST, lower than 73.06 US cents at Friday’s close.
ON THE ASX
* The benchmark S&P/ASX200 index closed lower by 155.5 points, or 2.1 per cent, to 7248.2 on Monday.
* The All Ordinaries closed down by 165 points, or 2.14 per cent, to 7537.9.
* At 1724 AEST, the SPI200 futures index was down 10 points, or 0.14 per cent, at 7206 points.
One Australian dollar buys:
* 73.31 US cents, from 73.06 cents on Friday
* 79.36 Japanese yen, from 80.31 yen
* 61.76 Euro cents, from 62.07 cents
* 52.89 British pence, from 52.00 pence
* 103.10 NZ cents, from 103.31 cents.Internet Explorer Channel Network