ASX 200 closes 2.2% lower after Wall Street plunged on stagflation fears

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Highlights

 

  • ASX 200 closed 2.2 per cent lower, or 159.1 points, to 7205.6, ending the week 3% lower, the largest weekly decline since February.
  • Tech sector was down 4.5%, led by Xero’s 9% drop. Property sector, hit hard by rising interest rates followed suit.
  • Global markets tracked Wall Street lower on fears that aggressive tightening by central banks could derail global growth.

Today, the Australian share market digested the Reserve Bank of Australia’s (RBA) statement on monetary policy. It also reacted to Wall Street’s major turn upon stagflation fears and plunged on qualms of what rising interest rates will do to the world’s largest economy, and other nations consequently.

Back home, the Central Bank said that it might raise interest rates further as unemployment can drop to the lowest level since 1974, powering wages growth and underpinning consumer-price growth. The outlook for inflation is also materially higher. However, the labour market has improved further and demand for labour is strong. Housing construction has been supported by specific policy measures. The Bank stated that the outlook for business and public investment spending remains positive. Overall, GDP is forecast to expand by 4¼% over 2022. 

There are other factors impacting share markets right now- Covid-related lockdowns in China are worsening supply chain disruptions while the Russia-Ukraine war continues. In Australia, the election fever has finally set in.

How did ASX 200 perform?

Wall Street plunged overnight on stagflation fears. Today morning, only three stocks in the ASX 200 managed to stay in the positive territory as the market plunged 2.2% to a low of 7201.9. At noon, the ASX 200 was down 2.5%, or 186 points to 7178.5 with all sectors lower. Big falls came from mining, healthcare, and tech stocks. Ahead of marker close, the benchmark index was down 2.3% to 7192.7.

Eventually, the ASX 200 closed sharply lower, dropping 159.10 points or 2.16% to 7,205.60 and setting a new 20-day low. Over the last five days, the index has lost 3.09% and 2.04% over the last 52 weeks.

On the sectoral front, all 11 sectors finished lower. The session's top sector, consumer staples, was lower by -0.17%, continuing its -1.23% decline for the last five days.


 


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