icon
icon
icon
icon
Upgrade
icon

ASX 200 Rebounds After Historic Plunge Amid RBA's Mixed Signals

AInvestSunday, Aug 11, 2024 9:00 pm ET
1min read
Australia's stock market saw a slight uptick on August 6, rebounding after two consecutive days of significant losses. This comes amid a broader market reaction following signals from the Reserve Bank of Australia (RBA) regarding interest rate policies. While the RBA revealed it would not cut rates before year-end, market participants remain skeptical, which is reflected in the stock market movements.

The ASX 200 index surged by over 0.8% during early trading hours, reaching 7713.7 points, although it later retraced some of its gains. By the end of the day, the market maintained a positive trajectory. The upward movement was driven primarily by gains in the non-essential consumer goods, financial, real estate, and industrial sectors, all of which saw increases exceeding 1%.

This bounce came in the wake of the ASX 200 index experiencing its steepest drop since May 2020, plunging 3.7% on August 5 and wiping out nearly AUD 100 billion in market value. The previous trading day saw a decline of 2.1%, marking the worst two-day performance for Australian shares since 2020.

According to some economists, the sharp falls were an overreaction to disappointing U.S. employment data released on the preceding Friday. As a result, many investors have opted to 'buy the dip,' showing renewed confidence in the market.

In the afternoon of the same day, the RBA announced its decision to keep the benchmark interest rate unchanged. However, RBA Governor Philip Lowe indicated during a press conference that the central bank's board had considered the possibility of a rate hike. He also clarified that while a rate cut is not imminent, there were no clear indications of when it might happen. Analysts have interpreted this as the RBA ruling out any rate cuts within the next six months.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.