Australian Share Market Loses $60BILLION in 30 Minutes As Global Inflation Fears Spook Investors
By Stephen Johnson
Australia’s share market has lost $60billion in half an hour as global inflation fears caused a 2.5 per cent plunge – taking it back to 2020 levels.
A half a percentage point interest rate rise in Switzerland, the first in 15 years, on the back of this week’s 0.75 percentage point rate hike in the U.S., the biggest since 1994, has caused a decline in every major sector of the Australian Securities Exchange.
Interest rates were also raised in the UK – the Bank of England’s fifth increase since December – and Taiwan, causing a 3.25 per cent plunge on Wall Street’s key S&P 500 index.
Australia’s benchmark S&P/ASX200 was down 2.5 per cent to 6,425.7 points by 10.30am on Friday, Sydney time, just 30 minutes after the market opened.
The Australian share market is now 15 per cent below the peak in April and is back to its worst level since November 2020 shortly after the Reserve Bank of Australia cut the cash rate to a record-low of 0.1 per cent.
Another negative finish on Friday would mark the sixth straight session of losses.
CommSec market analyst Steven Daghlian said global inflation fears were scaring investors across all sectors from banking to consumer staples like the big supermarkets.
‘We’re continuing to see widespread declines as well,’ he told Daily Mail Australia.
‘Rough going, of course the main driver has been what has happened with what central banks are doing – some of the largest rate hikes we’ve had in decades around the world.
‘That’s just creating concerns that to control inflation, central banks are pushing up rates fast enough that it could create a sharp slowdown in the global economy.’
Within the first hour of trade, Commonwealth Bank shares were down 3.6 per cent to $87.23.
Mining giant BHP fell 3.9 per cent to $42.21 as supermarket giant Coles fell 1.1 per cent to $16.62.
New Commonwealth Bank rate forecasts on the RBA cash rate
JULY: Up 0.5 percentage points to 1.35 per cent
AUGUST: Up 0.25 percentage points to 1.6 per cent
SEPTEMBER: Up 0.25 percentage points to 1.85 per cent
NOVEMBER: Up 0.25 percentage points to 2.1 per cent
Defensive stocks like health, that are normally immune from market fluctuations, are also taking a hit with Ramsay Health Care down 2.3 per cent to $71.48 as CSL dropped 1.5 per cent to $254.90.
Origin Energy was down 1.9 per cent to $5.67 as Telstra fell 1.8 per cent to $3.81.
‘That can happen when you see these type of conditions where markets are quite pessimistic,’ Mr Daghlian said.
‘Even supermarket chains, consumer staples, utilities, telcos, which can do better in this environment, they’re all under pressure as well.’
The US Federal Reserve’s 0.75 percentage point increase – the steepest since 1994 – is stirring fears of an American recession.
‘That’s certainly one of the fears or at least a significant slowdown in its economy,’ Mr Daghlian said.
Financial markets are broadly expecting the Reserve Bank of Australia to raise the cash rate by another 0.5 percentage points in July.
The half a percentage point increase in June was the first 0.5 percentage point rise since February 2000 and following May’s 0.25 percentage point rise, it was the first back-to-back increase since May 2010.
Another increase in July would mark the first rate increases for three straight months since 2010 but the most aggressive monetary policy tightening since 1994.
The ASX200 finished the Friday 1.8 per cent weaker at 6,474.8 points.