The Australian Securities Exchange (ASX) has fallen to its lowest in 30 months, as investors react to selling pressure and a revised economic outlook.
The S&P/ASX 200 index rose 0.8 per cent as the market opened, on the back of gains made in the US last night. But by close, it had fallen 0.39 per cent to 4,909.6 points, with all 10 sectors in the red.
This adds to the 2.3 per cent lost last week. Some of the biggest losers were energy stocks, which were down by more than three per cent during Tuesday's session.
It follows on from strong selling pressure in the US junk bond market, with concern rising that sell-offs will occur in high-yield funds. Last night, Lucidus Capital Partners said it has liquidated its fund, not long after Stone Lion Capital Partners and Third Avenue Management both suspended withdrawals.
Brent crude also went through a volatile night, falling to new lows and then making small gains to trade at $37.70 a barrel.
Meanwhile, the Australian Treasury has revised many of its economic predictions downwards in its Mid-Year Fiscal Outlook.
In particular, it expects the country’s deficit for the 2015/2016 fiscal year to be AU$37.4bn – $2bn deeper than predicted in May.
Over the next four years this deficit is expected to become even greater and reach a total of AU$108.3m – AU$26m.1bn more than previously estimated.
In terms of iron ore, price assumption was reduced to $39 per tonne – a big drop from the $48 per tonne predicted in May. The Australian treasury said this was likely to have a considerable impact on government revenue.