Aussie stock market wipes out nearly $90 billion on horror day

The Australian stock market nearly $90 billion in value lost in a day of horror as investors see the implications of Wall Street entering a “bear market.”

The benchmark S&P/ASX 200 closed 3.55 percent or 246 points to 6686 points, although that was a slight rebound from morning when it fell to 6600 points.

The biggest losers for the day came largely from the commodities sector, including Fortescue Metals (8.48 percent), James Hardie Industries (-6.88 percent) and Bluescope Steel (-5.94 percent).

ASX200 June 14
The ASX 200 fell 3.55 percent today. (Google)

The early carnage was the ASX 200’s worst loss since March 2020, following fears that the then-rising COVID-19 pandemic would wreak havoc on the global economy.

Today’s local index results follow overnight Wall Street, where rising inflation in the US has fueled fears of an economic recession.

Wall Street was officially dubbed a “bear market” overnight, meaning in economic terms prices are falling and investors are feeling encouraged to sell.

A bear market takes its name from the way a bear sweeps down with its claws, leaving trails that are synonymous with falling red lines on stock charts.

The biggest losers for the day came largely from the commodities sector, including Fortescue Metals (-9.07 percent), James Hardie Industries (-9.18 percent) and Bluescope Steel (-7.71 percent). (MONKEY)

Dow loses 876 points on worries about ‘drastic’ rate hikes

U.S. stocks collapsed overnight as Wall Street investors grew increasingly nervous about the prospect of even stricter drugs from the Fed to take the sting out of inflation.

The Dow fell 876 points, or 2.8 percent.

The Nasdaq fell 4.7 percent and is down more than 10 percent in the past two trading sessions.

The broad S&P 500 fell 3.9 percent.

That index is now more than 20 percent below its all-time high in January, sending stocks into a bear market.

Wall Street is officially in a “bear market” as prices fluctuate downward. (AP)

Fears of a recession mounted after Friday’s dismal Consumer Price Index report showed US inflation was significantly higher than economists had expected last month.

That could complicate the Federal Reserve’s inflation-control efforts.

After raising interest rates by half a point in May — an action the Fed hadn’t taken since 2000 — Chairman Jerome Powell promised more of the same until the central bank was convinced inflation was under control.

At that point, the Fed would resume standard quarter-point increases, he said.

But after May’s hotter-than-expected inflation report, Wall Street is increasingly calling for tougher action from the Fed to keep prices in check.

Jefferies joined Barclays on Monday in forecasting the Federal Reserve would raise interest rates by three-quarters of a percentage point, an action the Fed has not taken since 1994.

Federal Reserve Chairman Jerome Powell is expected to drastically raise interest rates to curb inflation in the US. (AP)

“After nearly a week of holding their breath in anticipation of the US CPI report for May, investors exhaled exasperated as inflation came in higher than expected,” said Sam Stovall, chief investment strategist at CFRA, in a note to clients Monday morning. .

Stovall said the risk of larger gains dragged markets lower on Monday.

Investors fear two outcomes, neither of which are good: Higher rates mean higher borrowing costs for companies, which can hurt their profits.

And overzealous action by the Fed could inadvertently plunge the US economy into recession, especially if companies start laying off workers and the red-hot housing market collapses.

There are no signs that the job and housing markets are in danger of collapsing, although both are cooling off a bit.

Additional reporting by CNN.

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