Just 24 hours after Australian stocks spectacularly defied worldwide falls, fears of global recession today wiped $56 billion from the value of local shares and sent the dollar plunging to a five-year low.
The five per cent dive on the Australian Stock Exchange was the biggest one-day fall for both major exchange indices since January 22 this year.
It followed a brief surge yesterday after the Reserve Bank of Australia stunned the market when it slashed the official cash rate by a full percentage point.
The move fired up local trade yesterday, with shares defying global trends for the day with a 1.7 per cent gain.
But just 24 hours later that confidence had evaporated, with a rout on the local bourse reflecting the worldwide trend.
NabCapital currency strategist John Kyriakopoulos said today's fall came after hopes were dashed for coordinated rate cuts by major central banks last night to stave off world recession.
"We were probably hoping for some coordinated interest rate cuts yesterday and they were not delivered," he said.
"The perception is the global economy is heading for ruin."
Today, the benchmark S&P/ASX200 index plunged 4.99 per cent, while the broader All Ordinaries tumbled 4.96 per cent.
The Australian dollar hit a five-year low, falling 4.40 US cents to 68.34 US cents, the local currency's lowest close since September 29, 2003 and its first close below US70 cents since September 21, 2004.
