SYDNEY - Australian stocks slumped the most in almost five years, led by National Australia Bank and BHP Billiton on speculation rising global interest rates will curb economic growth and stifle demand for raw materials.
"A combination of slowing growth and rising interest rates in the US is the worst
news for stocks everywhere," said Jason Teh, who manages $4 billion at Investors Mutual in Sydney. "That scenario is looking more likely every day."
The S&P/ASX 200 Index slumped 118.3 points, or 2.4 per cent, to 4907.2 at the 4.15pm close in Sydney, its biggest drop since a 4.7 per cent plunge on September 17, 2001, in the wake of the terror attacks in New York. Six times as many stocks fell as rose.
The benchmark has slipped 8.5 per cent since its record high on May 11.
Losses for the Australian benchmark worsened in afternoon trade as a slide in Asian markets deepened concerns that rising inflation will force central banks around the world to boost interest rates even as global economic growth slows. Australia's central bank raised interest rates to a five-year high on May 3. A stronger than expected local jobs report raised the chance of a further rise in the months ahead.
BHP, the world's biggest mining company, slid A$1.30, or 4.7 per cent, to A$26.55. Rio Tinto, the third-biggest, dropped A$3.50, or 4.5 per cent, to A$73.72. Woodside Petroleum, Australia's second-biggest oil producer after BHP, lost A$2.04, or 4.7 per cent, to A$41.11.
Stocks that rely on US growth slid. Rinker Group, the biggest supplier of cement blocks in the US, dropped 47c, or 2.8 per cent, to A$16.51. James Hardie Industries, the biggest supplier of home siding in the US, fell 30c, or 3.7 per cent, to A$7.90.
The prospect of higher interest rates at home sent lenders such as National Australia Bank lower.
NAB, the nation's biggest lender by assets, dropped 98c, or 2.8 per cent, to A$33.87. CBA, the second-biggest, slid 97c, or 2.3 per cent, to A$42.10.
- BLOOMBERG
