Australian shares fell the most in over three weeks slipping 2.4 percent on Thursday as data from China aggravated fears of deflation in the world's second biggest economy. In a complete turnaround from Wednesday, the S&P/ASX 200 index shed 125.13 points to 5,095, posting its biggest percentage drop since August 24. Banks and miners fared the worst. The benchmark rose 2.1 percent in the previous session.
Despite Thursday's fall the index is still up about 1 percent for the week so far compared with a 4.2 percent drop the previous week, which was its biggest since June. New Zealand's benchmark NZX 50 index barely changed to finish the session at 5,670.99 points. Investors shrugged off slightly better-than-expected jobs data from Australia while data from China, the biggest market for Australian exports, aggravated fears of deflation in the world's second biggest economy.
Despite Thursday's fall the index is still up 1.34 percent for the week so far compared with a 4.2 percent drop the previous week, which was its biggest since June. The index is down 5.5 percent year-to-date, on track for its worst performance since 2011. "I think those Chinese concerns are still front and centre," said Damien Boey, equity strategist, Credit Suisse. Major banks steered Thursday's losses with Westpac, National Australia Bank and ANZ falling about 3 percent each.
"It's not just Australian banks, it's developed world banks that are actually taking a hit on China concerns," Boey said. China's manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflation risks in the economy and adding to expectations for further stimulus measures. Hospital chain Healthscope fell as much as 7 percent after their holding company cuts its stake. Commodities highlighted lingering concerns about global growth, with US crude oil sliding nearly 4 percent overnight.
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