Aussie share market loses $100 billion in bloodbath

The Australian share market has plummeted amid a global sell-off, sparked by US recession fears over weak jobs data.

More than $100 billion has been wiped off Australian shares in the worst sell-off in four years.

The ASX 200 plunged 3.7 per cent to 7649.6 points on Monday, following a 2.1 per cent slump on Friday, all sparked by sharp selling on Wall Street on the back of weaker than expected jobs data in the US. 

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The S&P 500 was down by 3.1 per cent in morning trading and the Dow Jones Industrial Average was down 956 points, or 2.4 per cent, at 10.10am on Monday (1.10am on Tuesday AEST) amid a global sell-off shaking world markets.

Australia's big banks lost more than four per cent today, Wesfarmers and Woodside were down more than three per cent and Telstra lost more than two per cent.

The tech sector was the worst-hit overall but losses were felt across the whole ASX 200, with only one company making a gain.

The news was even worse in Japan, where the benchmark Nikkei 225 stock index plunged 12.4 per cent in its biggest ever one-day loss and European markets also opened lower today, down more than two per cent in Berlin, London and Paris. 

Traders are reacting to fears there could be a recession in the US. Some analysts are worried the economy is slowing too much and the Federal Reserve — the US equivalent of the Reserve Bank – has waited too long to cut rates.

"I don't think anyone's surprised by a bit of a blow off the top of the market that the US in particular has experienced," Airlie Funds Management Australian equities head Matt Williams told The Australian Financial Review.

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"The view was that the Fed had threaded the needle in terms of avoiding a recession and taming inflation – in other words a soft landing – but that narrative has, for now, done a 180."

The $101 billion sell-off is a sobering backdrop to tomorrow's RBA interest rates.

Almost all economists expect the cash rate to stay on hold at 4.35 per cent, with a cut considered more likely than another hike, if anything.

Westpac and Commbank are tipping a first cut in November, ANZ expects it in February next year and NAB is eyeing May.

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Stock markets had mostly been travelling in one direction, higher, with relatively few huge swings in the past year. 

A bonanza around artificial-intelligence technology helped drive Big Tech stocks higher in the US while other areas of the market held up amid rising hopes for coming cuts to interest rates by the Federal Reserve.

But professional investors have been warning shakier times may be ahead given uncertainty about how quickly the Fed will cut interest rates and other big questions.

Stocks began tumbling in earnest on Friday after US employers added just 114,000 jobs in July – 35 per cent fewer than expected – and unemployment rose to 4.3 per cent, the highest since October 2021.

That fanned worries high interest rates might push the US economy into a recession, which would have global effects.

"The real question now looms: Can the typical market reflex to sell volatility or buy the market dip prevail over the deep-seated anxiety brought on by this sudden and sharp recession scare?" Stephen Innes of SPI Asset Management said in a commentary.

The Aussie dollar is buying 64 US cents, less than 59 Euro cents and 50 British Pence.

- With Associated Press

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