The S&P/ASX 200 closed sharply lower on Tuesday, dropping by 138.70 points or 1.66% to end at 8,205.70. The index crossed below its 20-day moving average, reflecting investor jitters. The losses mirrored Wall Street’s overnight sell-off, which has rippled through global markets, weighing on Australian stocks.
Sharp Decline in ASX 200 Performance
Polynovo Limited and Viva Energy Group were the index’s worst performers, falling 8.40% and 6.67%, respectively. Over the past five days, the ASX 200 has lost 1.35%, now sitting 2.13% below its 52-week high. The index’s slide reflects growing concerns about inflation and rising bond yields in the US.
Sector-Wide Losses Across the Board
All 11 sectors in the ASX closed in the red. The biggest losses were reported in Health Care and Real Estate, with falls of 2.43% and 2.27%, respectively. Consumer Discretionary and Financials also suffered significant declines of 2.00% and 1.85%. Other sectors like Energy, Utilities, and Industrials dropped between 1.30% and 1.50%.
Top Gainers Despite Market Downturn
While most sectors experienced losses, a few companies posted gains. Praemium Ltd (PPS) led the rally, surging 6.72%. Ioneer Ltd and Wildcat Resources Ltd followed closely, rising 5.46% and 4.29%, respectively. Mercury NZ Ltd and Capitol Health Ltd also posted gains of over 4%.
Wall Street’s Slide Spills Over to Australian Markets
The downturn in the ASX 200 follows a significant sell-off on Wall Street, where both the Dow Jones and the S&P 500 saw major declines. The US markets retreated after weeks of gains, ending a month-long winning streak. The rally, which began in October 2023, had been driven by the US Federal Reserve’s announcement that it would pause rate hikes.
However, fears of resurging inflation have recently unsettled investors. Bond yields are now approaching 4.2%, prompting concerns about higher borrowing costs. The rising bond yields and inflation fears are sending shockwaves across global markets, including Australia.
Biggest Decliners in the ASX 200
In Tuesday’s session, Hutchison Telecommunications (Australia) Ltd fell the most, dropping 11.11%. Opthea Ltd followed with a decline of 10.99%. Other major losers included Iperionx Ltd and Southern Cross Gold Ltd, which dropped by 7.06% and 6.84%, respectively.
Energy Crisis and Rate Uncertainty Add Pressure
The decline in the ASX 200 coincides with ongoing concerns about global energy prices and uncertain interest rate policies. Rising inflation in the US is forcing central banks to reconsider rate hikes, which could increase borrowing costs globally. Meanwhile, energy stocks in Australia fell by 1.51%, with companies like Viva Energy experiencing sharp losses.
Currency Movements Provide Some Relief
On the currency front, the Australian dollar showed moderate strength. The AUD rose 0.40% against the US dollar to 0.6685. Gains were also recorded against other major currencies, including the Euro, Pound, and Canadian dollar. The increase in currency value reflects investor hopes that the Reserve Bank of Australia might hold interest rates steady.
What Lies Ahead for the ASX?
The ASX 200’s recent losses underscore the fragile state of global markets. Analysts expect continued volatility as inflation concerns, rising bond yields, and geopolitical risks remain in focus. Investors will likely watch central bank decisions closely in the coming weeks.
With both the US and Australian markets facing challenges, it remains uncertain whether the ASX 200 can regain momentum. For now, the focus will be on economic data and earnings reports that could provide clearer direction.
