A board showing stock prices is seen at the Australian Securities Exchange in Sydney.
Australian shares were set to lose a tenth of their market value in the first half of 2022, and analysts warned of more pain ahead of a central bank counterattack to stem the surge in inflation and fears of a slowdown in major global economies.
The benchmark S&P ASX 200 index shed around A $250 billion, or roughly $172.05 billion in market value, amid policy tightening, Russia-Ukraine war and fears of a recession.
The index fell to 57 out of 123 sessions, declining more than 10% over two weeks in June due to a commodity rout that put it firmly into the red and confirmed that the market was in a correction.
Technology and banking stocks were among the major losses in the first half, while iron ore miners were sold off late. Graphic: ASX 200 H 1 performance, https: fingfx.thomsonreuters. Com Gfx mkt akvezlrmgpr Pasted 20 image 201656555005157.png The Reserve Bank of Australia RBA delivered a larger than expected 50 basis-point rate hike in June after consumer prices hit a 20 year high. Analysts expect continued volatility and maybe steeper rate hikes to continue weighing on markets.
I suspect the RBA is still behind the curve and may have to up its cash rate forecasts. Matt Simpson, a senior market analyst at City Index said that the RBA is now playing catch-up and this could lead to the risk of spilling over into H 2 and weighing on equities.
The ASX hopes that the price of oil will fall with inflation expectations, which is what the best outcome for the ASX in H 2 is. com gfx mkt egvbkgwmapq Pasted 20 image 201656552993765 png Tech stocks plummeted more than 35% in the first half and will likely remain under the pump as valuations deteriorate, bond yields rise, and a boom in niche subsectors such as buy now, pay later fades away.
Tech valuation has come off significantly from its COVID 19 peak, but we may not be out of the woods yet. The risks of further re-rating and downgrades are clearly present amid the slower-growth environment, said Yeap Jun Rong, a strategist at IG.
The tech sub-index has a price-to- earnings ratio of 53.74, almost five times more than the benchmark's 10.88.
Australia's big four lenders lost ground between 2.5% and 14%, as the policy of the RBA sparked fears of a sell-off in the housing market.
Major commodity firms outperformed, as prices were well supported for most of the half. Rio Tinto and BHP increased by 6% and 15.7%, while coal miners Whitehaven and New Hope went up as well. Major Aussie blue-chip gainers and losers, https: fingfx.thomsonreuters. com gfx mkt gkvlgezxkpb Pasted 20 image 201656553976005.
