ASX Rise as Woodside Reports Increased Profit and Oil Prices Surge, but Wall Street Sell-off Intensifies

Must Read

Despite another plunge in global markets due to the potential of more forceful US and European interest rate hikes, the Australian share market clawed back some of its losses.

The Australian Stock Exchange’s leading benchmark, the ASX 200, rose 0.5% to 6,998 points. Woodside Energy (+1.5%) and Santos (+1.5%) are energy stocks that helped drive the market higher. 

After Russia and Saudi Arabia announced they would cut their output, oil prices jumped 4% overnight. Meanwhile, Bubs Australia fell 5% despite record revenues, while Healius climbed 3.5% after lifting its dividend.

At 4:30 p.m. AEST, August 30, 2022, the Australian dollar was trading at 68.97 US cents, down slightly from its all-time high of $70.10 set earlier in the day. While the US greenback briefly hit a 20-year high of $69.55 before closing at $69.04 per barrel for West Texas Intermediate crude oil and $0.65 for Brent crude oil on Tuesday afternoon.

Building Approvals Drop Dramatically

“The local currency was impacted by ‘weaker than expected building approvals data,” said Commonwealth Bank senior economist Kristina Clifton.

Building approvals tumbled by a worse-than-expected 17.2% in July, compared to the meagre 3% drop that economists had forecasted.

“Building permits are volatile month to month, but there is currently a negative trend,” Ms Clifton added.“High-interest rates and construction costs make buyers hesitant to purchase new properties. We predict that residential construction will hurt the economy in 2023.”

A recession is on the horizon and will hike interest rates sooner than expected. Investors became more cautious of an impending recession, so they chose to sell off their riskier assets.

The S&P 500 ended the day at 4,030 points after losing 0.7% of its value, while the Nasdaq Composite fell 1.1%  to 12012 and the Dow Jones index slipped by 0.6% to finish at 32,100 points.

That was on top of their sharp declines on Friday, during which the Dow Jones Industrial Average, Standard & Poor’s 500 Index, and Nasdaq Composite were all down between 3 and 4%.


The US market collapse has now spread to Australia, with the ASX 200 falling 2%.

Jerome Powell, the chair of the US Federal Reserve, said on Friday that interest rates would need to stay low “for some time” to keep inflation under control.

At the Jackson Hole central bankers summit in Wyoming, his hawkish comments dashed hopes that the Fed might lower rate hikes after recent data showed inflation might be easing.

Likewise, European Central Bank board member Isabel Schnabel’s comments exacerbated market fears.

On Saturday, she warned central banks that the public would lose trust in them if they didn’t take forceful measures to curb inflation. Even though this means central banks’ economies might enter a recession—it’s necessary.

“The message from the Jackson Hole summit was loud and clear, which was not what investors were anticipating,” said Nordea’s head of analysis, Jan von Gerich.“For central banks to be convinced that inflation is dying down, there needs to be a fair amount of evidence. The news is terrible for the economy and investors’ feelings about taking risks; if rates continue to increase rapidly, we could fall into an even deeper recession.”

In light of recent events, it is clear that the economy is heading towards a recession. Interest rates will continue to rise, making it difficult for businesses and consumers. Be cautious with your investments and aware of the risks involved in these volatile times.

- Advertisement -spot_img
- Advertisement -spot_img
Latest News
- Advertisement -spot_img

More Articles Like This

- Advertisement -spot_img