“Over the past couple of weeks, a number of these have been ticked off, namely policy stimulus, progress on valuation, a re-tightening of credit spreads and weak data,” Mr Haslem said. “However, at this stage, we are yet to achieve ‘peak disease’, which appears the most critical for markets to the extent it impacts whether the outlook is a U, V or L-shaped recovery.”
The losses on Thursday were led by banking stocks, undermined by the news of Reserve Bank of New Zealand ordering the country’s banks to suspend paying dividends, raising concerns the same outcome could be seen in Australia.
“Significant dividend cuts are likely from the banking sector and it is our belief that smaller banks will be hurt more than larger banks, due to thinner margins and narrower funding avenues,” said Dr Don Hamson, managing director at Plato Investment Management.
All of the big four tumbled more than 3.8 per cent, led by NAB, which fell 5.6 per cent to $16.00.
Coupled with weakness in the banks, steep falls in wealth managers saw the broader financials sector slip 4.2 per cent, the latter impacted by a swathe of substantial price target downgrades from investment bank Credit Suisse.
While financial stocks came under significant pressure, educational services providers were given a rare reprieve during the session.
IDP Education soared 27.6 per cent to $14.75 after completing a successful institutional equity raising.
G8 Education jumped 28.6 per cent to $1.08 before being halted ahead of a trading update from the company. The share price spike followed news the government will provide support to the struggling childcare sector.