- The ASX 200 entered a bear market on Wednesday, defined as a fall of 20% or more.
- The share market has fallen 20.5% in just 14 days, the sharpest fall in Australian history.
- It comes as Trump’s “very dramatic” stimulus overseas remains missing in action.
- Visit Business Insider Australia’s homepage for more stories.
The ASX 200 has a bad case of the coronavirus.
Having flirted with one this week, the Australian sharemarket officially entered a bear market, defined as a 20% drop or more, on Wednesday.
While a surprise rally on Tuesday pushed it back to safety, a 3.6% fall on Wednesday wiped $64 billion more from the beleaguered index and put it beyond all doubt. At the close of the session, the loss put the ASX 20.05% lower than where it was 14 days, at an all-time record high of 7162.5 – having dropped an astounding 1436 points. It claims the unfortunate title of being the sharpest fall in Australian history.
It seems nothing could save it. On Monday more than 7% was wiped out, following similar falls on Wall Street. On Tuesday, a surprise late afternoon rally helped add 3.11% to the board. Any hope for a two-day rally was quickly abandoned on Wednesday, however, when the index gave away some initial gains and didn’t stop moving lower all day.
Even initial reports that the Australian government will unveil as much as $20 billion in fiscal stimulus on Thursday wasn’t enough to shift investor sentiment. Nor for that matter a $2.4 billion healthcare package to help curb the coronavirus outbreak locally.
Certainly, it wasn’t enough to curb an about-face in Washington, where US stimulus has gone missing in action. While the Trump administration lifted global markets on Tuesday after flagging payroll tax cuts were on the table, it soon helped push them lower when it became apparent the relief was far from finalised.
The ASX punished Tuesday’s correction and looks to do so again when Wall Street reopens, with Dow Jones futures pointing to a 700 point loss.
What happens there, and what the Australian government promises in way of spending, will determine how much further our share market will slide.
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