Oil prices plunge on ‘recession fear’, ASX struggles as Australian dollar hits two-year low

Renewed concerns about a global recession have led to sharp declines in the Australian dollar, commodity prices and global markets.

Oil prices were hit hardest, dropping about 9 percent overnight, on fears that an economic downturn and the prospect of more lockdowns in China will hurt demand.

The Australian stock market ended the day moderately lower, with the ASX 200 dropping 0.5 percent to 6,595 points.

Many of the best performing stocks today were in the technology sector, such as Zip Co (+12.8 pc), EML Payments (+10.5 pc), Megaport (+14 pc), Tyro Payments (+9.5 pc) and Life360 (+13.9 pc).

On the other hand, prospectors such as St Barbara (-9.5 st), Regis Resources (-6.9 st) and Newcrest Mining (-6.6 st) suffered heavy losses, along with Graincorp (-6.8 st), Beach Energy (-8 pc), South32 (-8.3 pc) and Woodside Energy (-6.9 pc).

However, the biggest barriers in the market were iron ore mining giants Rio Tinto (-7.4pc), BHP (-5.6pc) and Fortescue Metals (-4.9pc).

Iron ore, gold and copper sink

The price of the steelmaking equipment plummeted after Shanghai announced new rounds of massive COVID-19 testing, raising concerns about further lockdowns in China, the world’s largest steel producer.

The contract for the first month of August on the Singapore Exchange fell 4.2 percent to USD 107.75 per tonne.

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“As we have said repeatedly, stricter COVID measures could return to China,” economists at ING said in a note.

“And there are more positive COVID tests in Shanghai again.

Spot gold fell 2.3 percent overnight to its seven-month low of $1,767.05 an ounce.

Copper fell to $7,670 a ton, its lowest level in 19 months.

One reason for the sharp drop in metal prices is the US dollar, which hit a 20-year high.

Since commodities are priced in US dollars, a stronger dollar makes gold, copper and oil more expensive to buy.

Huge losses for Australian dollar and euro

At an overnight low, the Australian dollar fell to 67.62 cents, its weakest level in more than two years.

By 4:30 p.m. AEST, it bought 67.87 cents, a steep 1 percent drop since yesterday.

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