In a shocking opening, the Australian share market took a nosedive, shedding $67 billion within the first thirty minutes of trading. Concerns over rising interest rates and ongoing lockdowns in China triggered this 2.5 percent initial drop.
The plunge on the S&P/ASX200 reflected the continuing downward spiral that Wall Street is experiencing.
While the local market’s 2.5 percent decline was significant, it paled in comparison to the 3.2 percent drop suffered by New York’s S&P 500.
Despite this, the drop still wiped out $67 billion from the valuation of Australia’s top 200 listed companies by 10:30 AM on Tuesday, a mere half-hour after trading commenced.
All 11 sectors registered losses, although some mitigation occurred by early afternoon. However, fears of further lockdowns in China continued to heavily impact mining stocks, keeping investor sentiment subdued.
The Australian share market lost $67billion in the opening half hour of trade as interest rate rise fears and China’s lockdowns caused an initial 2.5 per cent plunge
CommSec market analyst Steven Daghlian said share markets had reacted badly to the US Federal Reserve last week raising a key interest rate by a half a percentage point – the biggest increase in 22 years.
‘It’s contributed to it. Markets more broadly are just getting used to that idea that rates have already increased and they’re going to probably continue to do so,’ he told Daily Mail Australia.
‘For a while we’ve been talking about higher rates and now it’s at the point rates are actually rising.’
The US rate rise came just days after the Reserve Bank of Australia raised the cash rate by 0.25 percentage points, marking the first increase since November 2010 and ending the era of the record-low 0.1 per cent cash rate.
The Australian Securities Exchange losses moderated in the early afternoon, with the market 1.27 per cent weaker shortly before 2pm, Sydney time, at 7,030.6 points.
Mining shares did particularly badly even as the share market losses became less severe, with BHP down 3.25 per cent to $44.71 as Rio Tinto fell 4.12 per cent to $102.40.
The spot price of iron ore has fallen by 5.88 per cent to $US128 a tonne, as China’s lockdowns in Shanghai and possible draconian restrictions in Beijing weigh on commodity prices.
‘Obviously rough day: we’ve got all 11 sectors down,’ Mr Daghlian said.
All 11 sectors of the Australian share market were weaker, with the losses moderating by the early afternoon as worries about more lockdowns in China weighed on mining stocks (pictured is a food delivery truck in Shanghai where residents are locked inside)
‘The mining and energy companies in particular are falling quite heavily – that’s a reflection of commodity prices which have been falling and concern there are still tight restrictions in Beijing and Shanghai.’
China, Australia’s biggest trading partner, is the biggest buyer of iron ore, the commodity used to make steel.
The Australian share market is on track to finish weaker for the third straight session and is now down 5.8 per cent compared with the start of 2022.
In just three days, however, the market had lost about five per cent of its value at the worst point on Tuesday.