Wall Street lost ground on the last day of the financial year and the benchmark S&P 500 index posted its worst first-half-year fall since 1970.
Key points:
- The Dow Jones index fell 0.8pc to 30,775, the S&P 500 index fell 0.9pc to 3,785, and the Nasdaq Composite lost 1.3pc to 11,029.
- The FTSE 100 index lost 2pc to 7,169, the DAX fell 1.7pc to 12,784, and the CAC 40 fell 1.5pc to 5,923
- At 7:30am AEST, the ASX SPI 200 index rose 0.2pc to 6,473, while the Australian dollar was buying around 69 US cents
US stocks have been sold off sharply this year because of worries that aggressive interest rate rises by the US central bank could tip the North American economy into recession.
Overnight, the Dow Jones index dropped 0.8 per cent to 30,775, the S&P 500 index fell 0.9 per cent to 3,785 and the Nasdaq Composite lost 1.3 per cent to 11,029.
All three major US stock indexes finished the month and the second quarter in negative territory.
Both the S&P 500 and the Nasdaq Composite index are in a bear market, down more than 20 per cent from their peak.
The Nasdaq saw its biggest percentage fall on record for the six months from January to June, while the Dow suffered its biggest first-half percentage plunge since 1962.
The year began with spiking cases of COVID-19 due to the Omicron COVID-19 variant.
Then came Russia’s invasion of Ukraine, decades-high inflation and aggressive interest rate hikes from the Federal Reserve, which have stoked fears of a possible recession.
“All year, it’s been a tug-of-war between inflation and slowing growth, balancing tightening financial conditions to address inflation concerns but trying to avoid outright panic,” Paul Kim, chief executive officer at Simplify ETFs told Reuters.
Economic data showed that US consumer spending rose less than expected in May as cars remained scarce, while higher prices forced people to cut back on spending.
“We’ve started to see a slowdown in consumer spending,” said Oliver Pursche from Wealthspire Advisors.
“And it seems that inflation is taking its toll on the average consumer and that translates to corporate earnings, which is what ultimately drives the stock market.”
Europe markets plunge
European stocks saw their worst quarter since the start of the pandemic in early 2020.
Overnight, the FTSE 100 index lost nearly 2 per cent to 7,169, the DAX in Germany decreased by 1.7 per cent to 12,784, and the CAC 40 in Paris fell 1.5 per cent to 5,923.
The Australian market ended the last day of the financial year in the red with the ASX 200 index falling by nearly 2 per cent and posting its worst month since the pandemic began in March 2020.
But the market is set to rise today with the ASX SPI 200 index up 0.2 per cent to 6,473 at 7:30am AEST.
At 7:30am AEST, the Australian dollar was buying around 69 US cents.
Oil prices fell more than 3 per cent as major oil-producing group OPEC confirmed it would maintain previously announced production increases despite tight global supplies because of the war in Ukraine.
Brent crude oil was down 1.2 per cent to $US114.88 a barrel at 7:30am AEST, while West Texas crude lost 3.4 per cent to $US106.10 a barrel.
Spot gold lost 0.5 per cent to $US1807.22 an ounce.
ABC/Reuters
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