//Foreword//
Just after the long weekend, the Australian stock market staged a "bloody" incident...
html No one in the 111 sections was spared, and the whole army was wiped out!
The Australian dollar exchange rate also plummeted 2%...
#01:
The Australian stock market was wiped out and the Australian index plunged 5%.
Global stock markets entered a technical bear market
According to a report by News.com.au, due to Inflation is serious, The Federal Reserve announced an interest rate hike to curb inflation, After Monday US stocks plummeted, this morning opened , and the Australian stock market also showed a sea of red.
(Photo source: News.com.au)
This morning, the ASX200 index fell sharply by 349.4 points to 6582.6 points, a drop of up to 5%.
1 market sectors were wiped out, and only two of the ASX200 constituents rose - Uniti and Crown, with gains of only a few tenths of a percent.
The index hit its lowest level since February last year, its worst performance since the outbreak of the new crown epidemic in March 2020.
(Image source: News.com.au)
Technology stocks were the hardest hit, with the sector falling a total of 8.2%, including payment services, as the Nasdaq index tumbled 4.7% overnight and expectations of interest rate hikes increased. Companies Zip and Block fell more than 18%.
The market is worried that demand for iron ore may weaken. The three major iron ore producers all fell by no less than 6.2% in early trading today:
BHP fell 6.2% to 43.35 Australian dollars, Rio Tinto fell 6.2% to 108.67 Australian dollars, and Fortescue fell. 7.7% to A$19.81.
Last week, after the Reserve Bank of Australia raised the cash rate by a larger margin than expected, the four major banks encountered difficulties again. Today they all fell more than 4.6%:
ANZ fell 5.3% to AU$21.84; CBA fell 4.6% to AU$89.46; NAB fell 5.2% , to A$26.61; Westpac fell 6.5% to A$19.49.
(Photo source: News.com.au)
Not only the Australian stock market, but also the Asia-Pacific stock market and European stocks were affected this morning and fell. Some analysts pointed out that the global stock market has now entered a technical bear market.
The root cause of all this is related to the Federal Reserve's active tightening of monetary policy.
The United States released a CPI inflation report last Friday, which strengthened the expectation that the Federal Reserve will maintain a radical stance of raising interest rates in the long term.
High inflation coupled with a strong US dollar caused investors to flee for safety, causing further pressure on the stock market.
#02:
The Australian dollar exchange rate plummeted 2%,
has fallen for a week in a row.
While the Australian stock market plummeted, the Australian dollar exchange rate plummeted.
As of press time, the exchange rate of the Australian dollar against the US dollar was 1:0.6940. Compared with today's opening of 0.6925,
has increased slightly, but the decline this time still reached about 1.9%.
(Picture source: Sina Finance)
The situation of the Australian dollar to RMB exchange rate is similar. also showed a slight rebound trend today after a sharp decline.
reached the level of 1:4.6846 as of press time.
(Photo source: Sina Finance)
Looking back, the Australian dollar’s decline actually started last Wednesday.
Since June 8, the exchange rate of the Australian dollar against the RMB has started a downward trend for seven consecutive days, plummeting from 4.82 to 4.67.
(Picture source: Sina Finance)
On the same day, the exchange rate of the Australian dollar against the US dollar started from 0.72, falling for a week in a row, to 0.69.
(Photo source: Sina Finance)
Previously, the market expected that the Federal Reserve would significantly raise interest rates to control inflation, causing investors to sell risky assets and buy U.S. dollars, causing the U.S. dollar exchange rate to soar.
It is reported that the US dollar currency index once rose 0.6% to 105.04 points, hitting the highest level since December 2002. The index tracks the performance of the U.S. dollar relative to six other major currencies.
The strong rise in the U.S. dollar, coupled with the plunge in global stock markets, caused the Australian dollar to suffer a heavy fall.
#03:
Economists warned:
Australia may experience an economic recession
Some economists warned that the Australian stock market was "bleeding". Behind the news of the Australian dollar's plunge was high inflation and the imposition of interest rates by the central bank .
If things continue like this, Australia may be headed for a "substantial decline."
Mark Delaney, chief investment officer of Australian Super, said The world economy is nearing the end of a 13-year bull market as global stock markets, oil prices and Bitcoin have all plummeted due to concerns about an economic recession caused by runaway inflation.
(Image source: News.com.au)
Mark Delaney pointed out that after years of strong employment growth, the global economy has "exhausted capacity", and as central banks around the world have raised interest rates to control inflation, it will be difficult to avoid The economy experienced a "substantial recession."
"
High wage growth, high inflation and labor shortages are the typical prerequisites for the end of this cycle.
"
His statement is supported by many economists who expect that starting next year, when interest rates rise and real Under the resistance of falling wages , the Australian economy will slow down significantly.
Sarah Hunter, senior economist at KPMG , said that the pace of Australia's economic growth will slow down significantly during the remainder of this year, and this slowdown will continue into 2023.
(Image source: idea.org)
"
We are clearly at a turning point in the business cycle. We are experiencing some external shocks that are detrimental to the economy, with insufficient supply of commodities being particularly evident. In addition, supply chain disruptions are also Exacerbating inflation.
”
Sarah Hunter said labor shortages and other supply constraints are putting a “brake” on economic development. She expects the cash rate to reach 2% by the end of this year and may increase further next year.
Barrenjoey chief economist Jo Masters said that as the economy faces a series of severe challenges, "growth is expected to slow significantly" starting next year.
She pointed out that inflation will lead to a decline in the real wages of Australians. At the same time, under the "wealth effect", falling house prices will make home buyers feel that their wealth levels have declined, which will lead to an increase in household consumption growth. slow.
(Image source: News.com.au)
Jo Masters expects the Reserve Bank of Australia to increase interest rates by 50 basis points next month, taking the cash rate to 2.25% by mid-2023.
The federal government also seems less optimistic about what's to come, warning that the budget situation is "terrible" and the deficit could explode further due to soaring inflation.
Finally
Prices are skyrocketing, banks are raising interest rates, and wages are unsustainable...
In the context of slowing global economic growth, Australia is likely to have to follow suit.
I just hope this day can come later.
