Australian percentage marketplace suffers $60 billion loss on China lockdown fears

Plunging commodity prices have dragged Australian shares lower on Tuesday morning, despite a stunning 11th-hour rebound on Wall Street as Twitter agreed to be taken over by billionaire Elon Musk for $61.4 billion.

The ASX 200 index had dropped 2.4 per cent to 7,206 points, by 10:45am AEST.

The broader All Ords index fell by a similar margin to 7,581 points. In dollar terms, around $60 billion was wiped off the value of the local share market.

Energy and materials stocks suffered heavy losses, including Fortescue Metal (-7.7pc), BlueScope Steel (-8.7pc), BHP (-6pc), Woodside Petroleum (-6.1pc), Santos (-4.8pc) and Rio Tinto (- 4.9pc).

The Australian dollar fell to a two-month low of 71.86 US cents.

It has been a volatile week for the local currency, which traded as high as 74.58 US cents last Thursday, before sinking as low as 71.35 US cents yesterday. Essentially, it experienced a peak-to-through loss of 4.3 per cent.

“Markets fear additional lockdowns in China will restrict activity and impact economic growth, not just in China but also throughout the rest of the world,” ANZ economists Brian Martin and Daniel Hynes wrote in a note.

The Australian dollar is particularly sensitive to China’s lockdowns and slowing economic growth.

That is particularly given that China is the biggest buyer of Australia’s iron ore, which tumbled 9.8 per cent, to $US135.75 a tonne.

‘Ridiculous valuations’

On Wall Street overnight, the Nasdaq ended sharply higher as growth stocks staged a late-day rally.

It was after Twitter agreed to be taken over by the world’s richest man Elon Musk, which drove the social media company’s share price up to 5.7 per cent.

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