ASX follows the US market down as inflation rears its head
The ASX plunged 197 points when it opened this morning following a rout on Wall Street caused by skyrocketing inflation in the US.
The ASX 200 has plunged on global inflation concerns (Photo: AAP Image/Erik Anderson)
The ASX retreat represented a fall of 2.8 per cent, or $66 billion, significantly less than the 3.9 per cent fall on the Dow Jones or the 4.3 per cent fall on the broader S&P 500 index.
The high inflation rates in the US meant it was likely that its Federal Reserve would continue to hike rates by 75 basis points at its next meeting.
Westpac said US inflation went completely against expectations. Core CPI was 0.6 per cent in August, double the expectation. The annual core inflation measure was now 6.3 per cent.
Some Queensland companies were getting hammered in early ASX trade. Novonix was down 9 per cent wiping off strong gains this week, Far East Gold was down 11 per cent, Change Financial was down 10 per cent, Diatreme Resources was down 7 per cent, Corporate Travel Management and ALQ were down 3 per cent, lithium company AllKem fell more than 4 per cent and EML Payments was down 6 per cent.
The Australian dollar also retreated to US67 cents.
AMP Capital economist Shane Oliver said the falls were big but context was needed.
He said the fall took the market back to levels reached last week.
“The market remains vulnerable to further falls in the short term given interest rates and the recession risk,” he said.
September was also a week time of the year.
