ASX opens 1.6pc lower as investors flee banks, energy stocks

The Australian sharemarket opened lower on Tuesday as concerns about contagion from the Silicon Valley Bank collapse spread across global markets, causing investors to flee from bank stocks to the safety of bonds and gold.P/ASX 200 plunged 1.6 per cent, or 111.8 points, to 6997 at the open, in a broad sell-off that dragged all 11 sharemarket sectors lower.

The KBW Bank Index, which tracks the performance of 24 major banks, sank nearly 12 per cent. That marked its biggest decline since the start of the pandemic in March 2020, with regional US banks leading the decline.First Republic Bank dropped 62 per cent as news of fresh financing failed to reassure investors, while Western Alliance Bancorp and PacWest Bancorp fell 47 per cent and 21 per cent, respectively. Trading in the stocks was halted several times.

Rates futures markets now imply the US Federal Reserve has finished its tightening cycle and will cut rates by a half percentage point later this year.

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