Australian shares suffered their biggest one-day fall since the COVID-19 pandemic, with the ASX 200 index dropping 4.2%. The market was influenced by a significant sell-off on Wall Street, which set the tone for global markets, including those in Australia and Asia, for heavy losses. The ASX 200 plunged over 6% at the opening bell on Monday, with no sector spared from the sell-down.
By the close, nearly $110 billion in value was wiped off the market. The broader All Ordinaries index shed 4.1%, marking a drastic monetary loss in a single session. Energy and mining stocks were particularly hard-hit as commodity prices declined, adding to the economic woes.
Financial sector stocks also suffered heavy losses, with banks facing questions about credit quality in the midst of an economic slowdown. Commenting on the market turmoil, Betashares Chief Economist David Bassanese stated, “There are few equity market winners from a trade war.
Market turmoil grips Australian shares
At a sector level, there has been a notable rotation, with traditional defensives outperforming cyclicals. Consumer staples and other less cyclical areas have held up relatively well, while companies with high supply chain exposure to Asia have been hit hard.”
Treasurer Jim Chalmers addressed the market volatility, acknowledging substantial fluctuations in global stock markets and other economic indicators, including the Australian dollar, which was under pressure against the US dollar. As of 5:00 pm AEST, the Australian dollar was trading around 60.2 US cents.
The market is also anticipating further interest rate cuts, with the treasurer indicating that four rate cuts are now priced in, including the potential for a 50 basis point cut at the next Reserve Bank of Australia meeting in May. Elsewhere in Asia, markets experienced deep losses with significant declines in Hong Kong, Tokyo, Singapore, Taiwan, and Shanghai. US stock market futures were pointing to further declines as American markets prepared to reopen on Monday.
Financial analysts noted that only 10 of the 200 most valuable stocks made gains during the session. The energy sector, in particular, faced prolonged heavy selling, as did banks and miners. Overall, the market now appears to be pricing in a potential recession, with investment strategists suggesting that a “circuit breaker” such as significant fiscal or monetary intervention may be required to stabilize investor sentiment.
