The S&P/ASX 200 plunged 3.7 per cent on Monday,the worst daily fall since May 2020,after a “bloodbath” on Friday that shot the bourse down 2.1 per cent. The global sell-off smashed Japan’s market particularly hard,with the Nikkei tumbling a record 12 per cent.
The ASX 200 has lost more than $130 billion in the past two trading sessions,tracking the losses on Wall Street,where the S&P500 sank 1.8 per cent on Friday,the Dow Jones dropped 1.5 per cent and Nasdaq fell 2.4 per cent.
After the sharp falls of recent days,which have been driven by sentiment in the US,the ASX 200 is now up 0.3 per cent so far this year.
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US employment data showed 114,000 jobs were created in July,significantly below market expectations for jobs growth of 175,000,while the unemployment rate rose to 4.3 per cent – the highest level since October 2021. Another report out of the US showed manufacturing activity,which is highly vulnerable to rising interest rates,was still shrinking,and its contraction was accelerating.
While spooked investors began selling off stocks on US recession fears,economists and market analysts said the index was correcting itself after reaching record highs recently. The ASX 200 surpassed the 8100 mark as recently as Thursday.
“[Australia’s] economy slowed down,but we’re not in a recession,” said David Bassanese,chief economist at Betashares. “Obviously,we’re going to be worried … The old adage here is that if the US economy sneezes,we catch a cold,so we’re watching closely what’s currently happening in the US.”