Around $25 billion was wiped off the Australian share market last week. Uncertainty over the outlook for the US economy and the escalating sovereign debt crisis in Greece sent Aussie shares to their lowest point since August 2010.
The benchmark S&P/ASX 200 Index dropped nearly 88 points last week, and the All Ordinaries sank a similar amount. Mining stocks were particularly hard hit, with commodity prices tumbling. Australia’s major banks were also heavily sold as concerns over the global financial impact if Greece defaults on its debt repayments, played on investors’ minds. Market analyst Peter Esho from City Index told The Australian that traders across the globe are worried about debt problems in Europe.
“We’re starting to see some signs of contagion across Europe with the situation in Greece,” he said. Debt markets are reportedly factoring in a 74 per cent chance that Greece will not meet its debts and three major banks in France have had their ratings put on review because of exposure to Greece. The European Central Bank has said that contagion from the debt crisis is the top risk to the euro zone, and re-affirmed its opposition to the restructuring of Greek debt.