Wall Street tumbles into bear market. What does that mean for ASX 200 shares?

Only two ASX 200 shares are currently recording gains.

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Key points

  • The ASX 200 has been hit with a major blow on Tuesday after the Australian market exited a three-day weekend during which the Wall Street benchmark sunk into a bear market 
  • The S&P 500 fell nearly 4% on Monday's session overseas – leaving it more than 21% lower than its 2022 peak 
  • At the time of writing, the ASX 200 is 5% lower with only 2 of its constituents trading in the green 

S&P/ASX 200 Index (ASX: XJO) shares are suffering a barrage of turbulence today after Wall Street tumbled into bear market territory overnight.

The S&P 500 ­– the United States (US) benchmark index – plunged 3.88% on Monday, leaving it 21.8% lower than its early January high.

Its suffering came amid increasing fears the nation could enter a recession. This also likely spells bad news for ASX 200 shares. They were tipped to potentially suffer a “double hit” on Tuesday.  

Right now, the ASX 200 is down 5%, an even greater dip than that predicted by SPI futures earlier.

Here’s what market watchers need to know about international markets’ recent volatility.

ASX 200 shares tumble on a turbulent Tuesday

Wall Street is officially in a bear market amid fears the US Federal Reserve could kick off a recession. Of course, it was always unlikely that ASX 200 shares would dodge the global carnage.

Inflation in the US increased by 8.6% year-on-year according to data released on Friday (US time). That’s the fastest the measure has risen in 41 years.

It’s left many believing the Federal Reserve could hike interest rates higher than previously expected, beginning in coming days, reports the Wall Street Journal. By hiking interest rates, whether in one foul swoop or through many smaller boosts, the Fed could spark a recession.

Suffering alongside the S&P 500 overnight were the Nasdaq Composite and the Dow Jones Industrial Average. The major indexes fell 4.68% and 2.79% respectively overnight.

The Australian dollar also slumped 1.21% on Monday to reach 69.33 US cents. Finally, cryptos were hit hard overnight as Bitcoin (CRYPTO: BTC) fell 16.39% to US$22,203.90.

All that is putting pressure on ASX 200 shares on Tuesday. Particularly, as they get back to business after the three-day weekend.

“The Australian holiday yesterday may mean the local market suffers a double hit today,” Tiger Brokers chief strategy officer Michael McCarthy said prior to market open.

The S&P/ASX 200 Information Technology Index (ASX: XJI) is the index’s worst performing sector today, likely on the back of the tech-heavy Nasdaq index’s stumble. It’s down 8.05% at the time of writing.

Tech favourites Block Inc (ASX: SQ2) and Zip Co Ltd (ASX: ZIP) are the ASX 200’s worst performing shares, falling 17.7% and 16.6% respectively.

The S&P/ASX 200 Consumer Staples Index (ASX: XSJ) is the best performing sector. That’s despite it recording a 3.24% drop.

Uniti Group Ltd (ASX: UWL) and Crown Resorts Ltd (ASX: CWN) are the only ASX 200 shares in the green.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Block, Inc., and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Bitcoin and Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

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