NZX 50 slumps 2.6%; US inflation ignites recessionary concerns

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NZX 50 slumps 2.6%; US inflation ignites recessionary concerns

 NZX 50 slumps 2.6%; US inflation ignites recessionary concerns
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Highlights

  • The NZX 50 fell 2.6% on Tuesday taking cues from Wall Street.
  • Global stocks slumped after US inflation data ignited fears of aggressive rate hikes ahead.
  • Oil prices stayed above US$120 per barrel while gold futures were up during the day.

The New Zealand share market tumbled on Tuesday after dropping 1.9% the day before. The fall comes as Wall Street saw a heavy sell-off prompted by high US inflation figures, sparking expectations of more aggressive rate hikes by the Fed that could risk the economy falling into recession.

US inflation data released on Friday showed its inflation surging to a 40-year high of 8.6% YOY in May. The Fed is due to meet for its policy meet on 15 June and there are expectations of a 50bps rate hike.

The benchmark NZX 50 index fell 2.61% to 10,641 points on Tuesday.

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The drop in the index was majorly led by a substantial fall in IT and industrial stocks. Top stock Fisher & Paykel Healthcare (NZX:FPH) fell 2.55% on Tuesday. Leading stocks showed losses, which included Mercury NZ (NZX:MCY), Contact Energy (NZX:CEN) and Mainfreight (NZX:MFT) falling between 4% to 5%.

Geneva Finance (NZX:GFL) was the top gainer of the day with shares up 4.71% followed by Comvita’s (NZX:CVT) shares, which were up 1.89%.

Global stocks slip on policy tightening concerns

US equities tumbled on Monday with the bond yield soaring as investors become increasingly concerned over inflation. The US recorded a CPI of 8.6% YOY in May, sparking expectations of aggressive interest rate hikes by the Fed in the second half of the year.

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The S&P 500 lost 3.85%, the NASDAQ Composite fell 4.65% and the Dow Jones Industrial Average dropped 2.73% in Monday’s trading session.

Asian stocks were also trading lower on Tuesday on the back of a grim session on Wall Street.

At the time of writing, Australia’s S&P/ASX200 sank 5%. Japan's Nikkei 225 was down 2% and Hong Kong’s Hang Seng Index fell 0.95%.

Oil prices down, gold prices held firm

Oil prices fluctuated during the day but held strongly above US$120 per barrel. This came amid fears of demand dampening despite recession fears and a possibility of new COVID-19 restrictions in China. There are also increased worries about oil supply due to a decline in exports from Libya, and OPEC+ producers struggling to fulfil their production quotas.

At the time of writing, WTI crude oil was down 0.1% to US$120.81 per barrel, while Brent crude oil was up 0.11% to US$122.11 a barrel.

Gold prices were trading marginally lower on Tuesday after registering a huge drop in prices as US inflation hit a 40-year high. Spot gold prices were trading 0.4% higher at near US$1,826.87 per ounce. U.S. gold futures were trading 0.19% lower to US$1,828.3.

The NZ dollar weakened against most of the major currencies.

Crypto market down

The global crypto market cap fell 10.94% to US$932.74 billion in the last 24 hours. Major cryptocurrencies like Bitcoin, Ethereum, BNB, Solana, Polkadot, etc., were down over 20% today.

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