Australian markets suffer $90 billion wipeout as experts issue stark warning
About $90 billion has been wiped from the Australian sharemarket today due to surging oil prices and fears of a long war in Iran, and some experts fear the conditions could worsen.
The ASX200 index fell 2.9 per cent when the markets opened at 10am and continued to drop to a low of 4.3 per cent.
The market was on track for a $130 billion loss, which would have been the steepest single-day drop since the early days of the COVID-19 pandemic in 2020.
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The ASX plunged as the price of oil rose sharply. Oscar Colman
Some of those losses were pared back in later trading but the markets remained deeply in the red, closing at 2.85 per cent and erasing about $90 billion from investors' portfolios.
It was the worst session since US President Donald Trump's "liberation day" tariffs announcement last April.
"It's certainly an understatement to say that this is unusual," 9News finance editor Chris Kohler said.
"At its core, what investors are worried about here is stagflation, which is a combination of high inflation and low growth brought on by a big external shock."
The massive plunge comes on the back of rising oil prices, which have gone up 30 per cent, rocketing to $US110 per barrel.
It was the first time oil prices exceeded $US100 since the aftermath of Russia's invasion of Ukraine in 2022.
This was due to the continuing US and Israeli war in Iran all but shutting off the Strait of Hormuz, a key shipping route where about a fifth of the world's oil passes through.
Capital.com senior analyst Kyle Rodda warned market conditions could worsen the longer the war continues.
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The conflict in Iran is having a significant impact on the supply of oil around the world. Getty Images/iStockphoto
"It's something that only happens once in a generation, perhaps even less," he told 9News.
"This is why investors are so fearful about this escalation and the risk that this drags on, is because the longer that it does drag on, the worse things could potentially get."
Before the effects of the global conflict could be felt, the market reached a record high last Monday.
The price of oil had also trended lower over the past few years.
"The reason that the market reacted so savagely today is because things had been going quite well," Kohler said.
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