Wall Street carnage hits ASX: Aus shares 4.9% lower at noon

Market Reports

by Paul Sanger

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Wall Street carnage hits ASX

The local stock exchange has plunged in early trading, playing catch-up to a brutal sell-off on Wall Street as a holiday-shortened trading week kicked off.

Australian stocks are plunging deeply into the red today — wiping tens of billions of dollars off the value of the country’s top companies — as global markets are smashed and fears grow over a worldwide recession.

The benchmark S&P/ASX200 index was down 339 points, or 4.9 per cent, to 6,592.30 at 12:03 AEDT on Tuesday, its lowest level since February 2021.

The broader All Ordinaries was down 4.89 per cent to 6,795.6. 

Every sector was down at least 2.0 per cent. Tech plunged by 7.3 per cent, materials were down 5.6 per cent, and financials dropped 5.0 per cent.

Among blue chip shares early on Tuesday, Telstra (ASX:TLS) was down 1.84 per cent to $3.73, BHP (ASX:BHP) was down 5.7 per cent to $43.56, while Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) had fallen 5.35 per cent and 8.95 per cent, respectively.

The big four banks were down between 5.5 and 6.0 per cent.

Lake Resources (ASX:LKE) is a stand-out performer in the market today, trading +12.14 per cent at $1.57, driven by last week's announcement that Lake would be included into the ASX 200 as of 20 June 2022.

Afterpay owner Block (ASX:SQ2) had dropped 17.8 per cent to $90.13 as Bitcoin fell 15.9 per cent to $US22,485, its lowest level since December 2020.

The Australian dollar tumbled below 70 US cents amid the stock market rout, to a low of 69.20 US cents, as the greenback hit its highest in two decades on expectations of more steep rate rises by the Fed.

Why is the market plunging?

Markets in the US copped it hard over the weekend and again overnight seemingly amid panic that the Federal Reserve will lift interest rates far faster and higher than previously expected.

The fear is that if interest rates go up too quickly, it will drastically reduce the ability of the public to spend money on other things, leading to a recession next year.

The Australian stock market meanwhile has been closed for three days because of the long weekend and it has opened to a bloodbath this morning.

This follows on from a horror day on Wall Street overnight because of rising inflation, which has rocketed to 8.6 per cent in the United States and sparked a massive sell-off around the world.

Bond yields surge

Australian bonds have plummeted in response to inflation and recession fears.

Australian benchmark 10-year yields surged as much as 33 basis points to 4.01 per cent, which would mark the biggest one-day jump since 2008, according to Bloomberg.

Rate sensitive three-year yields rose as much as 42 basis points to 3.54 per cent, the highest level since April 2012.

Best and worst performers

All sectors are in the red. The sector with the fewest losses is consumer staples, down 2.2 per cent. The worst-performing sector is information technology, down 8.3 per cent.

The best-performing stock in the S&P/ASX 200 is Uniti Group (ASX:UWL), trading 0.4 per cent higher at $4.95. It is followed by shares Crown Resorts (ASX:CWN) and AVZ Minerals (ASX:AVZ).

The worst-performing stock in the S&P/ASX 200 is Zip Co (ASX:ZIP), trading 20.6 per cent lower at $0.50. It is followed by shares in Block (ASX:SQ2) and Chalice Mining (ASX:CHN).

Commodities and the dollar

Gold is trading at US$1824.32 an ounce.
Iron ore is 3.5 per cent lower at US$136.60 a ton.
Iron ore futures are pointing to a fall of 1.2 per cent.
One Australian dollar is buying 69.30 US cents.

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