An estimated $23 billion has been wiped off the Australia
n share market as it fell further in intra-day trading.
At 3pm (AEST) the benchmark ASX 200 index was 1.9 per cent lower at 3,989, dropping below 4,000 for the first time in seven months, and the broader All Ordinaries Index had fallen 1.9 per cent to 4,038.
The local market dropped after major indices in Europe and on Wall Street slumped on the back of disappointing US jobs figures, slow US manufacturing growth, record unemployment rates in Europe and weak Chinese manufacturing data.
Australia`s market opened at a six-month low and bounced for just 10 minutes before falling again, and by noon was trading near its lows of the session, Geoff Saffer, head of research at Australian Stock Report, said.
`The market has taken an absolute beating,` he said.
`You`d expect to see some stop losses getting hit and some investors really moving to the sidelines.
`We haven`t seen a big crash below 4,000 yet, so that specific technical impact hasn`t made itself felt today.`
Stocks on Wall Street slumped more than 2 per cent on Friday (US time) after very weak US employment figures increased fears of a slowing economy.
US government figures showed that employers added just 69,000 jobs last month, the lowest amount since May last year.
On top of the alarming jobs outlook in the United States
, investors are deeply worried about the eurozone debt crisis - unemployment in the eurozone has hit a record 11 per cent.
China is also playing on investors` minds, with more falls in factory output sparking concerns about the managed slowdown of the Chinese economy, and whether more stimulus is on the way.
Macquarie Private Wealth division director Martin Lakos told The World Today that risk aversion was driving the losses, as investors remained gloomy.
And he cautioned against excessive focus on index levels.
`I`m not sure there any real significance to a particular round number in the index,` Mr Lakos said.
`It probably is psychological, and there may be some chartists out there who are tracking support for the market around these sorts of levels - it`s a fairly exact science.
`Really, the markets are currently being driven by risk aversion and obviously negative sentiment, and that seems to be the biggest driver at the moment.` HSBC chief economist for Australia and New Zealand Paul Bloxham says while the chance of another global recession is rising, governments are likely to work hard to avoid it.
`If we see a further downturn in the US, for example, there`s further support from the Federal Reserve, the Europeans are not likely to allow it all to happen without actually responding and the Chinese - and in particular Asia - has a lot of space to move as well,` Mr Bloxham said.
`Overall Australia`s position is still relatively good.` Despite the renewed uncertainty on global financial markets, Treasurer Wayne Swan has sought to reassure nervous investors.
`We should never lose sight of how strong our economic fundamentals are, we should never lose sight of the fact that we face these challenges from a position of strength,` he told AM this morning.
`We`ve already factored into our budget a recession in Europe, a contraction of three quarters of a per cent.
So I think it`s just important we keep all of these things in perspective.` The major mining shares were struggling this morning BHP Billiton was 1.4 per cent lower and Rio Tinto has given up 2.6 per cent.
The big four banks were matching the market, with all losing around 1.5 per cent.
Telstra was faring slightly better, dipping just 0.1 per cent.
Some investors were putting money
, making the sector one of the few bright spots in morning trade.
Newcrest Mining`s share price was up 4.3 per cent, while smaller gold miners were jumping even higher - Oceanagold was up 9.8 per cent.