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ASX drops 3pct, snapping winning streak

Derek Rose
The Australian share market has plunged three per cent in its worst day in six weeks

The Australian share market has plunged three per cent in its worst day in six weeks, snapping a seven-day winning streak.

The benchmark S&P/ASX200 index closed Thursday down 187.8 points, or 3.05 per cent, at 5,960.6 points, while the broader All Ordinaries index closed down 189.8 points, or 3.03 per cent lower, at 6,079.5.

The drop was the worst single-day loss since the ASX200 plunged five per cent on May 1, and it left the index down 38 points, or 0.64 per cent, for the week.

Pepperstone head of research Chris Weston blamed a gloomy economic forecast announced by the US Federal Reserve on Thursday morning, Australian time.

The central bank's policymakers projected a 6.5 per cent decline in US gross domestic product this year and a 9.3 per cent unemployment rate at year's end.

"I think in terms of economic projections, they've taken a V-shaped recovery off the table," Mr Weston said.

There's also worrying signs of a second wave of coronavirus infections in the United States, Mr Weston said.

"At the end of the day, this whole thing was premised on economic reopening," Mr Weston said, referring to the ASX's strong gains in recent weeks.

He said the US was in for an interesting trading session on Thursday, but in Australia "it still feels like this is a buy the dip market".

All sectors were lower on Thursday, with energy and financials falling slightly over five per cent.

The big banks accounted for 54.7 points of the ASX200's decline, with ANZ falling the most, 6.2 per cent to $19.47.

Westpac dropped 6.1 per cent to $18.50, NAB retreated 5.4 per cent to $19.07 and CBA was down 4.4 per cent to $68.44.

In the energy sector, Woodside, Oil Search, Beach Energy and Origin Energy were all down between 5.1 and 7.1 per cent as the price of Brent crude dropped 2.5 per cent to just above $US40 a barrel.

Goldminers were the standouts, as the price of the precious metal climbed back over $US1,730 an ounce.

Newcrest, Evolution, Saracen Mineral and Northern Star gained between 4.2 and 6.8 per cent.

Among the diversified miners, BHP fell 2.0 per cent to $36.76, Rio Tinto declined 1.6 per cent to $98.86 and South32 dipped 4.4 per cent to $2.19.

Flight Centre dropped 10.4 per cent to $15.10, Webjet declined 10.1 per cent to $4.18 and debt buyer Credit Corp fell 10.3 per cent to $18.27, as traders apparently took profits after strong recent gains for all three companies.

Kogan.com rose 6.9 per cent to $13.23 after shares in the online retailer resumed trading following Kogan completing its $11.45-per-share $100 million institutional placement.

Alliance Aviation shares were in a trading halt as the charter airline operator announced a $122 million equity raising to buy new planes following strong demand from the mining sector.

JB Hi-Fi dropped 4.2 per cent to $40.22 despite bumping up its full-year profit guidance because of increased sales from customers forced to work from home.

Meanwhile, the Australian dollar was buying 69.20 US cents, down from 69.95 US cents at the close of trade on Wednesday.

ON THE ASX:

* The benchmark S&P/ASX200 index on Thursday closed down 187.8 points, or 3.05 per cent, at 5,960.6 points

* The All Ordinaries closed down 189.8 points, or 3.03 per cent, at 6,079.5 points

* At 1725 AEST, the SPI200 futures index was down 21 points, or 0.35 per cent, at 5,935 points

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 69.20 US cents, from 69.95 US cents on Wednesday

* 74.03 Japanese yen, from 75.06 yen

* 60.94 euro cents, from 61.61 cents

* 54.61 British pence, from 54.79 pence

* 106.71 NZ cents, from 106.80 cents.