Australian share prices are set to plunge when trading resumes on Thursday after stocks in the United States fell sharply overnight.
The ASX 200 index faces a 1.7% dive when the Australian Securities Exchange (ASX) opens at 10:00 am AEDT (11:00 pm GMT Wednesday), according to futures trading which priced the June share price index contract 149 points below the prior settlement at 8,540 points at the time of writing.
Morgans Financial private client adviser Lachlan Walsh said the market downturn had provided the opportunity to upgrade client portfolios by purchasing selected stocks that had fallen by 50% to 60%.
“We’re chipping away. A lot of high quality names have come off and a reasonably cheap. It’s tough out there,” he said.
Investors had been “caught in a hailstorm” of events, including the sell-off of stocks thought to be negatively affected by artificial intelligence, followed by the U.S. and Israeli war with Iran.
Walsh nominated Aristocrat Leisure (ASX: ALL), REA Group (ASX: REA), CAR Group (ASX: CAR), Pro Medicus (ASX: PME) and Eagers Automotive (ASX: APE) as stocks to buy.
Clients had also been advised to trim holdings of Woodside Energy (ASX: WDS), which had rallied 16% in the last month.
“It’s a really good time to do that. You don’t get these opportunities too often,” he said.
Major U.S. benchmarks fell at least 1.4% on Wednesday (Thursday AEDT) after the Federal Reserve kept U.S. interest rates unchanged and forecast only one more rate cut this year due to the inflationary impact of rising oil prices and the
The Dow Jones Industrial Average fell 1.6% to its lowest close of 2026, the S&P 500 shed 1.4%, and the Nasdaq Composite lost 1.5%.
Economists had not expected the Fed to change its interest rate.
Angeles Investments Chief Investment Officer Michael Rosen said there was no argument for easing monetary policy with inflation running above target, the economy running above trend and elevated uncertainty about the path of the Iran war.
"The bigger challenge for the Fed, exacerbated by the war, is balancing its dual mandate of full employment and low, stable inflation. Should the war persist and oil prices remain high, it will cause economic slowing. But easing monetary policy would be a mistake as that would only fuel inflation," Rosen was quoted saying in a Reuters article.
The opening losses will more than wipe out the gains from Wednesday when the ASX 200 rose 26.3 points, or 0.3%, to finish at 8,640.6 as 10 of the 11 sectors ended in positive territory.
In fixed interest markets, the Australian Government bond yield curve steepened aas two year rates dropped by 0.2% to 4.757% and 10 year rates rose by 0.12% to 4.951% at the time of writing.
