ASX200 a sea of red after US Fed’s call on future rate cuts kills the Santa rally

Daniel Newell

The Nightly

2 Min Read

2 hours ago

A negative lead from Wall Street has spooked Aussie investors. Credit: Daniel Munoz/Getty Images

The ASX200 nosedived in early trade on Thursday following a disastrous lead from Wall Street overnight that saw all three major US indexes post their biggest daily decline in months.

Australia’s leading index was a sea of red in the first hour after the opening bell, with energy, mining and banking stocks leading the sharp retreat. But listed IT companies copped the biggest shellacking, down almost 3 per cent.

The index was down 1.8 per cent to 8158.8 points at 8.45am — a six-week low after a run of fresh record highs.

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The early rout has left the ASX200 on track for its worst session since August 5.

Uranium miner Deep Yellow was the biggest loser, down just over 9 per cent to $1.09, followed by Zip Co, which dropped 8.4 per cent to $2.86.

Megaport, HMC Captial and Pinnacle Investments rounded out the top five laggards — all down more than 6.5 per cent.

Credit Corp Group led the gainers, up just over 6 per cent to 94¢. Champion Iron was the next-best, soaring 4 per cent to 23¢. Iress, Nufarm and Insignia Financial were also among the winners, all up just over one per cent.

The negative lead from the US came after the Federal Reserve cut interest rates by a quarter of a percentage point but disappointed some investors with projections that signalled a more cautious path of easing in 2025.

The Fed cut rates by 25 basis points to the 4.25 to 4.50 per cent range and its summary of economic projections indicated it will make rate cuts totalling a half percentage point by the end of 2025 given the solid labour market and the recent stall in lowering inflation.

Among the big miners, Fortescue was down 3.6 per cent to $17.90, BHP was off 1.3 per cent to $39.74 and Rio Tinto was down 1.3 per cent to $117.

The Australian dollar was buying US62.02¢., from US63.13¢. at Wednesday’s ASX200 close.

IG analyst Tony Sycamore said the dollar had dropped a “jaw-dropping” 10.5 per cent in just over 11 weeks since its September 30 high of US69.42¢.

The Aussie was briefly below its current level for a few days in October 2022, when it fell as far as US61.70¢., but otherwise hasn’t been this low against the greenback since very early in the COVID-19 pandemic.