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ASX to drop after Wall Street plunge

Stock market graph chart with indicator investment trading stock exchange trading market monitor screen close up

Shares are expected to slide in early trading on the Australian market after US indices plunged over fears of a rise in COVID-19 cases in the country and negative economic projections.

The local SPI 200 futures contract was down by 181 points, or 3.04 per cent, to 5,775.0 at 0800 AEST on Friday, indicating heavy losses in share values.

US investors continued selling shares after the US Federal Reserve released its first pandemic-era economic outlook, with Chairman Jerome Powell warning of a “long road” to recovery.

Increasing COVID-19 infection numbers also have investors worried. A new analysis found that in 21 of the 50 US states, the rolling seven-day average of new cases per capita was higher than in the seven days earlier.

All three major US stock indexes lost well over 5 per cent, posting their worst one-day percentage drops since March 16, when markets were sent into freefall by the abrupt economic lockdowns.

In Australia, the market ended seven consecutive days of gains on Thursday.

The benchmark S&P/ASX200 index closed down 187.8 points, or 3.05 per cent, at 5,960.6 points, while the broader All Ordinaries index closed down 189.8 points, or 3.03 per cent lower, at 6,079.5.

The Australian dollar was buying 68.45 US cents at 0800 AEST. That was sharply lower from 69.27 US cents at the close of trade on Thursday amid rising risk aversion among investors.

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