Another day, another shellacking – Aussie markets suffer second day of big losses
Mounting fears of a US recession have led to a second day of heavy selling on the Australian share market, which is on track for its biggest two-day fall since the start of the COVID-19 pandemic.
Australian shares have maintained momentum after hitting all-time levels last week. (Pic Steven Saphore/AAP PHOTOS)
At noon AEST on Monday, the benchmark S&P/ASX200 index was down 229.4 points, or 2.89 per cent, to a six-week low of 7,713.8.
That put it on track for a five per cent loss over the past two days of trading, after finishing 2.11 per cent lower on Friday.
The broader All Ordinaries had dropped 240.4 points, or 2.94 per cent, to 7,930.
Not since March 2020, when markets were spooked by the outbreak of the COVID-19 pandemic, has the local bourse experienced such a vicious two-day sell-off.
“I think we’re in a fairly messy position here,” AMP chief economist Shane Oliver told Sky News.
“It looks to me like the inflation scare we saw earlier in this year in the US and more recently in Australia, has unnecessarily delayed monetary easing.
“And now, of course, the financial markets are starting to worry about that higher risk of recession.”
Global markets were rattled after US non-farm payrolls data released on Friday showed unemployment jumped to a near three-year high of 4.3 per cent, triggering the Sahm rule.
The Sahm rule says a recession is likely underway if the three-month average of the unemployment rate rises by half a percentage point in a year.
However, NAB senior economist Taylor Nugent says it doesn”t necessarily mean the US will enter a recession, and strong growth in labour force participation will somewhat temper the rise in unemployment.
“Regardless, it doesn’t take a recession to justify less restrictive policy,” he said.
On Friday, Japan’s Nikkei plunged 5.81 per cent. Meanwhile on Wall Street, the Dow Jones Industrial Average fell by more than 1.5 per cent, the S&P500 slipped 1.84 per cent and the IT-heavy Nasdaq sank 2.43 per cent.
IT stocks also led the way down on the ASX, ceding 4.9 per cent, while the remaining 10 industrial sectors were also more than 1.5 per cent in the red.
Australia’s biggest company by market capitalisation, BHP, was down 1.6 per cent, while fellow iron miner Fortescue fell 1.4 per cent.
Rio Tinto bucked the trend, edging 0.2 per cent higher.
CBA and Westpac both fell 3.7 per cent, while NAB and ANZ slumped 3.9 per cent.
Oil and gas giant Woodside fell three per cent to a two-and-a-half year low of $26.67 amid reports the proposed $30 billion-plus Browse development off Western Australia failed to get state environmental approval.
Sleep apnoea device manufacturer ResMed was one of Monday’s few winners, up 3.6 per cent to $32.93 after reporting positive earnings results last week.
But it was less positive for private hospital operator Ramsay Health Care, which retreated 1.7 per cent after flagging its full-year earnings, to be announced later in August, will be weaker than expected.
The Australian dollar was buying 65.04 US cents, from 65.25 US cents at Friday’s ASX close.
