Billions of dollars were wiped off the value of major Australian companies today in the biggest percentage fall on the ASX since February 2013.

The ASX200 was down 2.3% for the day, closing below the 5700 mark. Just weeks ago some commentators were talking about the market broaching 6000.

Australian banking stocks got smoked, continuing a trend seen over the past month.

Broad-based selling accelerated late in the session. It’s the largest one-day percentage fall on the market since February 2013. In points terms, it’s the biggest fall since September 2011 during the European debt crisis.

The A-VIX, a measure of expected volatility in prices, rallied in the last hour of trade and was sitting at around 19.00 a short time ago, close to its 52-week high of 19.16.

All 10 sectors were down, led by the financials sector, which is off 3%.

Commonwealth Bank was off a whopping 5.68%, wiping more than $7 billion off its market cap. The Commonwealth, Australia’s largest bank, reported flat profit growth during the March quarter before the start of the session.

Back at its March high of $96.69, commentators started talking about the Commonwealth becoming Australia’s first $100 stock. Today’s fall in CBA’s share price is the largest in percentage terms since January 23, 2009.

The losses in CBA are impacting other banking heavyweights with Westpac, NAB and ANZ shares lower by 3.29%, 2.35% and ANZ down 2.23%.

Other financial stocks were dragged under. AMP was down 2.44% to $6.39, Suncorp 1.68% to $12.9 and IAG 1.42% to $5.56.

CMC Markets chief markets strategist Michael McCarthy told Business Insider investors were questioning the major banks’ prospects following this week’s earnings results. “Cost cutting and provision release have propped up earnings growth over the last two years. As these wells are now dry, and global banking reforms make capital more valuable, the banking sector may be in for a substantial correction after its four year bull run,” McCarthy said.

McCarthy added:

The impact is exaggerated by the widespread popularity of bank shares with attractive dividend yields. An overweight position in bank stocks is now a very crowded traded, and the potential panic may see a push into “value” territory. The seeds are evident in CBA’s report. Declining earnings, contracting margins and rising costs paint an ugly picture, and underperformance in one of the few banking growth areas, mortgage lending, point to ongoing punishment of CBA’s share price.

This shift in focus from yield trumping all other factors, amid expectations that earnings would continue to rise forever, is a stark reality check.

In evidence of the pressure on profit margins at the major banks, CBA and NAB both today announced they would only be passing on 20 points of the RBA’s 25-basis point cut to the official cash rate, announced yesterday.

Investors punished Woolworths for a 2.1% slump in sales in the March quarter. Its shares were weaker by 4.96% to $28.16





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