ASX dives at the open as recession fears spook investors

The Australian sharemarket has slumped at the open as the prospect of further interest rate hikes spooked investors and Wall Street continued its descent over fears the US economy may tip into recession.

The benchmark S&P/ASX200 dropped 1.71 per cent, or 112.9 points, lower to 6462.1 points at the open. Energy stocks were the biggest weight on the market, dropping 4.3 per cent as oil prices drift close to wiping out all of the year’s gains.

Mining stocks were also significantly weaker as all sectors started the day in the red. Whitehaven Coal was down 7.61 per cent, Pilbara Minerals slipped 5.77 per cent and Woodside Energy dipped 5.66 per cent.

Australia’s biggest fruit and vegetable wholesaler Costa Group’ shares have come under pressure, dropping more than 12 per cent to $2.23, after the sudden exit of company CEO Sean Hallahan.

Health sector heavyweight Ramsay Health Care also copped a bad start, with its shares slumping 6 per cent to $56.90, after it told the market that there was no new takeover offer for the company forthcoming. The $20 billion offer lobbed by a consortium led by private equity giant KKR for Ramsay was taken off the table earlier this month.

Link Administration was also feeling the pinch, in its first trading session since confirming the end of its planned takeover by Canadian suitor Dye & Durham, with its shares sliding over 9 per cent to $3.01.

Last week, stocks and bonds crumbled after the United States and half a dozen other countries raised rates and projected pain ahead. Japan intervened in currency trade to support the yen. Investors lost confidence in Britain’s economic management.

Wall Street tumbled on Friday, capping a troubling week for investors. Dow Jones Industrial index fell 486.27 points, or 1.62 per cent, to end at 29,590.41 – the lowest level since November 2020. The blue-chip heavy index’s closing figures were just shy of the level required for it to be classified as a bear market, that is a 20 per cent decline from the market high on January 4.

“A weekend of reflection hasn’t led anybody to change their opinion,” said National Australia Bank’s head of currency strategy, Ray Attrill in Sydney. “It’s a case of shoot first and ask questions later, as far as UK assets are concerned.”