Bottom drops out

Published in the Adelaide Advertiser, July 2008 by Erica Thompson

Almost $40 billion was wiped from the value of the Australian stock market yesterday in the biggest one-day fall in about six months. 

Bad news in the banking sector, weaker commodity prices and further woes on Wall Street dragged stocks to levels not seen since the beginning of the year.

The benchmark S&P/ASX 200 closed down 173.6 points, or 3.4 per cent, at 4970.5 after sinking as low as 4939.8 in intraday trade. 

The All Ordinaries index fell 157.4 points, or 3.03 per cent, to 5031 after hitting a low of 5003.2.

It was the biggest one day drop since January 22, when the All Ords fell 7.3 per cent and the S&P ASX 200 7.1 per cent.

"The fear is there's a lot more bad news to come," said Nader Naeimi, senior investment strategist at AMP Capital Investors.

Wealth Within chief analyst Dale Gillham said the medium-term direction of the market remained uncertain.

"It is still possible it could fall away to trade around 4300 points, which is the next support level on the All Ordinaries Index," Mr Gillham said.

Hopes of a recovery were scuttled after Wall Street experienced triple-digit losses following another round of weak U.S. housing sales data and a large jump in unemployment claims.

The Dow Jones index lost 283.10 points, or 2.43 per cent to 11349.28.