ASX plummets on Wall Street recession fears

Around AUS$60 billion in value was knocked off the Australian Stock Market (ASX) today in the wake of a major recession warning in the US, which prompted the worst one day fall at Wall Street in 2019.

The benchmark ASX 200 index mirrored the Wall Street collapse in closing 2.9% lower at 6,408, effectively wiping out the record gains reached just two weeks ago on July 30. It resembled the worst one day fall for Australia’s biggest 200 listed companies since February 2018.

Despite the broad losses of at least 1% across all sectors, the exchange remains in strong positive territory for the year. “(The) ASX has now fallen 6.83% since the July 30 record high…(but year to date) ASX still up 13.5%,” tweeted InvestSmart chief market strategist Evan Lucas.

In the US, the Dow Jones shed more than 800 points (3.05%) overnight after the yield curve on two and 10-year US Treasuries inverted for the first time since 2007 – an event which can signal an imminent recession.

A potential US recession would damage global growth, with investors selling down Australian shares accordingly.

The ASX and global markets were also rattled by news of Germany’s shrinking economy in the second quarter of the year and worse-than-expected economic data from China.