Massive Sell-Off Hits Australian Energy Sector
The Australian share market has suffered another brutal day, with the energy sector leading the plunge. The S&P/ASX 200 Energy Index (XEJ) crashed 6.54% in a single day, extending its losses to nearly 40% over the past year.
Performance of ASX 200 Energy
Oil, Gas, and Uranium Stocks in Freefall
Oil, gas, and uranium stocks are being hit hardest as fears of a global recession grow. AXP Energy Ltd plummeted by 33.33%, Eden Innovations Ltd dropped 25%, and Terra Uranium Ltd nosedived 21.05%.
Even major players saw significant losses. Paladin Energy Ltd fell 11.71%, Deep Yellow Ltd sank 12.02%, and Santos declined 8.2%. The collapse in oil prices, now hovering around $US60 per barrel, has worsened the situation.
Market Reacts to Global Recession Fears
Energy stocks tend to drop when recession fears rise. Experts point to tumbling oil prices and uncertainty in global trade as key drivers of the crash.
Global oil prices slumping to below US$60 per barrel presaged something nasty.
Federal Government Addresses Market Chaos
Finance Minister Katy Gallagher has responded to the economic turmoil, highlighting improvements in the government’s budget position.
She stated, “Gross debt will peak at 37 per cent of GDP, which is about 7.9 per cent lower than the 2022 PFO was forecasting.”
The government has saved $95 billion and tightened spending in key areas such as the NDIS and aged care. However, concerns remain about long-term economic stability.
Trump’s Trade War Sparks Global Panic
The Australian market is not alone in its struggles. US President Donald Trump’s recent tariff hikes have rattled global markets, triggering a widespread sell-off.
IG Markets analyst Tony Sycamore said, “The sell-off in US stock markets has intensified this morning after China retaliated on Friday night.”
Investors fear a full-scale trade war, similar to the 2020 COVID crash. This uncertainty has pushed many to exit energy stocks, exacerbating the market downturn.
Where Does the Market Go from Here?
With no end in sight to trade tensions, the energy sector may continue to struggle. Some analysts suggest further interest rate cuts could stabilise markets, but confidence remains low.
As panic grips investors, the question remains: how low can the market go?
