The Australian sharemarket is a sea of red again today after what was a horror night for international equity markets. The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down roughly 1% after midday with the losses widespread throughout the market.
Today's falls can be attributed to the enormous losses endured on China's stock market yesterday which saw the SSE Composite Index (SHA:000001) crash 8.5% — its worst decline in eight years – which was subsequently followed by a 0.7% and 1% decline from the Dow Jones and NASDAQ indices, respectively.
The Chinese government recently introduced a number of drastic measures to control the damage of the plummeting market and confidence amongst Chinese investors has obviously been hurt in a big way. The Shanghai market is down another 4.6% today, adding to the deepening concerns.
So far, Australia's banks are acting as the biggest weight on the broader market with all four sitting firmly in the red. Of the banks, Westpac Banking Corp (ASX: WBC) has fallen the heaviest which is likely a result of a technological glitch that is reportedly costing it $1 million a day.
Westpac is down 1.4% while its rivals, being Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd. (ASX: NAB) are all down roughly 0.6%.
China's latest sharemarket rout has also weighed on the resources sector. The fear is that if the impact of a sharemarket plunge leaks into the real economy, it could seriously dent the country's growth prospects and thus impact its demand for commodities.
Although the price of iron ore actually rose overnight, Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) have fallen 1.3% and 2.2% respectively, while a 3.1% fall in the price of oil has seen BHP Billiton Limited (ASX: BHP) shed 1.5%.
Unfortunately, the losses have spread far wider than the finance or resource sectors with other widely-held corporations also under pressure. Telstra Corporation Ltd (ASX: TLS) for instance is down 1%, while Westfield Corp Ltd (ASX: WFD), Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES) are down between 0.4% and 1.9%.
It is impossible to predict with any certainty how far the market might fall or how severe the impact will be but with China's equities once again under selling pressure, investors should brace themselves for more volatility in the near future.
