ASX falls sharply, Wall Street sinks on US-China tension and economic uncertainty – Michmutters

ASX falls sharply, Wall Street sinks on US-China tension and economic uncertainty

Australian shares have dropped in morning trade, as ongoing economic uncertainty and flaring US-China tensions weighed on global market sentiment.

The arrival of US House of Representatives Speaker Nancy Pelosi in Taipei, despite warnings from Beijing, prompted China to launch war plans and buzz the Taiwan Strait in protest.

The ASX 200 dropped by a steeper-than-expected 0.9 per cent, to 6,938 points, by 10:35am AEST.

Nearly every sector traded lower, with utilities and materials suffering the biggest losses. Seven out of every 10 stocks were in the red.

Some of today’s worst performers include Champion Iron (-5.3pc), APA Group (-3.2pc), Seven Group (-3.2pc) and Eagers Automotive (-3.2pc).

On the flip side, some of the best performing stocks were Pinnacle Investment Management (+10.7pc), Block (+4.9pc), and Lynas Rare Earths (+4.6pc).

Aussie dollar sinks

The Australian dollar fell 0.4 per cent, to 68.9 US cents. That was on top of its sharp loss of 1.5 per cent overnight.

The sell-off began yesterday, when the Reserve Bank lifted its cash rate target by 0.5 percentage points, which takes the new rate to a six-year high of 1.85 per cent.

The weaker Australian dollar was also driven by a stronger US greenback as investors piled into currencies that are seen as “safe havens”.

In that regard, the Japanese yen jumped 0.9 per cent against the greenback, and was on track for a fifth day of gains, its longest winning streak since 2020.

“There is the uncertainty surrounding Pelosi’s trip to Taiwan and there’s additional data, regarding economic softness,” said Sam Stovall, chief investment strategist of CFRA Research.

“Regarding recession [in the United States]it’s not a question of ‘if’ but ‘when’ and how deep.”

‘An open question’ about further rate hikes

On Wall Street, the S&P 500 slipped by 0.7 per cent, to end the session at 4,091 points.


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