The Australian stock market has lost more than $ 110 billion in value as investors see the implication of Wall Street entering a “bear market.”
At 13:00 AEST, the benchmark S & P / ASX 200 was down 4.77% or 330 points to 6,600 points.
The main losers of the day were largely in the resource sector, including Fortescue Metals (9.07%), James Hardie Industries (9.18%) and Bluescope Steel (7.71%).
It is currently the worst day on the ASX200 since March 2020. (Google Finance)
It is currently the worst loss of the ASX200 since March 2020, following fears that the then COVID-19 pandemic would cause enormous damage to the global economy.
Today’s local index results follow those of Wall Street overnight, where rising inflation in the United States has fueled fears of an economic downturn.
Wall Street was officially dubbed the “bear market” overnight, which in economic terms means prices are falling and investors are excited to sell.
A bear market derives its name from the way a bear slides down with its claws, leaving marks that are synonymous with falling red lines on stock charts.
The main losers of the day were largely in the resource sector, including Fortescue Metals (9.07%), James Hardie Industries (9.18%) and Bluescope Steel (7.71%). (AAP)
Dow is down 876 points due to concerns about “drastic” rate hikes.
Overnight, U.S. stocks fell as Wall Street investors became increasingly nervous about the prospect of an even tougher Fed drug to eliminate inflation.
The Dow sank 876 points or 2.8 percent. The Nasdaq was down 4.7 percent and has fallen more than 10 percent in the last two trading sessions.
The broader S&P 500 fell 3.9 percent. This index is now more than 20 percent below its all-time high set in January, putting stocks in a bearish market.
Wall Street is officially in a “bear market” as prices fall. (AP)
Fears of the recession rose after the miserable report on the consumer price index on Friday showed that US inflation was significantly higher than economists expected last month. This could hamper Federal Reserve inflation control efforts.
After raising interest rates by half a point in May, an action the Fed had not taken since 2000, President Jerome Powell promised more of the same until the central bank was satisfied that inflation was under control. At that point, the Fed would resume standard quarter-point hikes, he said.
But after the hottest inflation report expected in May, Wall Street is increasingly calling for tougher Fed action to keep prices under control. Jefferies joined Barclays on Monday in predicting that the Federal Reserve would raise rates by three-quarters of a percentage point, an action the Fed has not taken since 1994.
Federal Reserve Chairman Jerome Powell is expected to raise rates sharply to curb U.S. inflation. (AP)
“After holding its breath for nearly a week awaiting the May U.S. CPI report, investors exhaled in exasperation as inflation rose more than expected,” said strategist Sam Stovall CFRA Chief Investment Officer, in a note to clients Monday morning.
Stovall said the risk of higher rises dragged markets lower on Monday.
Investors fear two results, none of them good: higher rates mean higher borrowing costs for companies, which can affect their results. And overly enthusiastic Fed action could plunge the U.S. economy into an unintentional recession, especially if companies start firing workers and the housing market collapses.
There is no indication that the labor and housing markets are in danger of collapsing, although both are cooling slightly.
Additional reports provided by CNN.
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