Australian stocks follow Wall Street down

Stock MarketSydney - Australian stocks gave up 8.3 per cent Friday in response to Wall Street falling to a five-year low and big setbacks on Asia markets.

The ASX 200 dropped 360 points, or 8.3 per cent, to 3,960 after smashing through the psychologically important 4,000 barrier mid-session.

Resources stocks were down 8.3 per cent, financials down 7.4 per cent, industrials down 7.5 per cent and the four big high street banks were off 6-8 per cent.

The market was spooked by news reports that iron ore customers in China were delaying shipments, in the belief that prices for spot deliveries would fall below long-term contract prices because of withering global demand.

Fortescue Metals, a new player in the iron ore export market, was down 15.5 per cent.

Coal and iron ore are the biggest exports and any diminution in earnings from these commodities would have a big impact on government tax revenues and on its spending plans.

"(Delaying shipments) says that the demand for iron ore in China is a lot softer than it has been," said Goldman Sachs JB Were commodities analyst Malcolm Southwood. (dpa)

Business News: 
Regions: