The Australian share market has lost about 10 per cent of its value over the past financial year because of the war in Ukraine, the COVID-19 pandemic, supply chain disruption, high inflation, rising interest rates, and worries about a global recession.
In its end of financial year review, CommSec said both the All Ordinaries and the benchmark ASX 200 lost ground over 2021-2022, after jumping by one-quarter in the 2020-2021 financial year.
The All Ordinaries index fell 11.1 per cent over last financial year, after surging by 25 per cent in the previous year.
The ASX 200 index dropped 10.2 per cent, just the third financial loss over the past decade.
Both indexes are in correction territory after reaching record highs in August last year.
That is because of the global share market melting down as investors worry that steep rises in interest rates could tip the North American economy into recession.
CommSec chief equities economist Craig James said soaring inflation and steep rate hikes from global central banks as they wound back coronavirus stimulus weighed on the market.
"Supported by a strong domestic economy, and an easing in inflationary pressures, the Australian share market is tipped to claw back losses over the next 12 to 18 months.
"But with rapid changes taking place as the economy adapts, investors need to remain alert, pivoting their portfolios as needed."
ASX recovers some losses
A risk-off mood took hold of investors on Friday afternoon, causing the Australian share market to end its day modestly lower.
The ASX 200 closed 0.4 per cent lower at 6,540 points, while the All Ordinaries index fell by a similar margin to 6,720.
That was despite a positive start to the trading day, which pushed the local bourse up by around 0.8 per cent, at its intraday peak.
In the end, the Australian market followed a weak lead from Wall Street — in particular, its benchmark index, the S&P 500, recorded posting its worst first-half loss since 1970.
Energy stocks and miners weighed on the ASX because of lower commodity prices, but property, industrials, technology and financial stocks drove the gains.
Shares of Openpay Group surged by 20.8 per cent, after the buy now, pay later firm announced it was pausing its US operations and cutting its workforce as consumers cut back on spending because of higher interest rates.
The negative mood led to the Australian dollar tumbling by more than 1 per cent to around 68.3 US cents, by 4:40pm AEST.
Brent crude fell further during the Asia-Pacific trading session, down 0.4 per cent to $US108.62 a barrel.
Spot gold fell by 0.6 per cent, to $US1,796.58 an ounce.
Qantas hiring spree
Qantas said it had hired more than 1,000 operational staff since April, including cabin crew, airport customer service officers, pilots and engineers amid a surge in demand for air travel.
The airline said it had 20 per cent more team members on a stand-by roster because of illness from coronavirus and its ground handling suppliers have 15 per cent more workers.
It expects more than 350,000 customers to travel domestically this weekend.
Qantas shares closed 0.5 per cent lower, at $4.45.
The best performers on the ASX 200 index were biotech firm Mesoblast (+11.5 per cent), Imugene (+8.3 per cent), and gold miner Regis Resources (+7.7 per cent).
Going down were iron ore miner and mining contractor Mineral Resources (-4.1 per cent), engineering and logistics company Worley (-2.7 per cent), and data centre operator Megaport (-3.7 per cent).
Wall Street in the red
Overnight, the Dow Jones index dropped 0.8 per cent to 30,775, the S&P 500 index fell 0.9 per cent to 3,785 and the Nasdaq Composite lost 1.3 per cent to 11,029.
Global markets have been sold off sharply this year because of worries that aggressive interest rate rises by the US central bank could tip the North American economy into recession.
All three major US stock indexes finished the month and the second quarter in negative territory.
Both the S&P 500 and the Nasdaq Composite index are in a bear market, down more than 20 per cent from their peak.
The Nasdaq saw its biggest percentage fall on record for the six months from January to June, while the Dow suffered its biggest first-half percentage plunge since 1962.
The year began with spiking cases of COVID-19 due to the Omicron COVID-19 variant.
Then came Russia's invasion of Ukraine, decades-high inflation and aggressive interest rate hikes from the Federal Reserve, which have stoked fears of a possible recession.
Over the financial year, the US Dow Jones fell by 10.8 per cent for 2021-2022, with the S&P 500 index down by 11.9 per cent, while the Nasdaq fell by 24 per cent.
"All year, it's been a tug-of-war between inflation and slowing growth, balancing tightening financial conditions to address inflation concerns but trying to avoid outright panic," Paul Kim, chief executive officer at Simplify ETFs told Reuters.
Economic data showed that US consumer spending rose less than expected in May as cars remained scarce, while higher prices forced people to cut back on spending.
"We've started to see a slowdown in consumer spending," said Oliver Pursche from Wealthspire Advisors.
"And it seems that inflation is taking its toll on the average consumer and that translates to corporate earnings, which is what ultimately drives the stock market."
European markets plunge
European stocks saw their worst quarter since the start of the pandemic in early 2020.
Overnight, the FTSE 100 index lost nearly 2 per cent to 7,169, the DAX in Germany decreased by 1.7 per cent to 12,784, and the CAC 40 in Paris fell 1.5 per cent to 5,923.
Oil prices fell more than 3 per cent as major oil-producing group OPEC confirmed it would maintain previously announced production increases despite tight global supplies because of the war in Ukraine.
Brent crude oil was down 1.2 per cent to $US114.88 a barrel at 7:30am AEST, while West Texas crude lost 3.4 per cent to $US106.10 a barrel.
Spot gold lost 0.5 per cent to $US1807.22 an ounce.
ABC/Reuters
