Economist makes grim prediction as ASX plummets

Australian stocks are today plunging into the red, with billions wiped from the value of the country’s top companies.

The top 200 companies on the Australian stock exchange plummeted by over five per cent in the first 20 minutes of trade.

It’s the worst fall in the market since COVID-19 hit Australia.

Chief Economist at CommSec, Craig James, said the market has recovered marginally, but he expects most of the five per cent drop to hold.

“We have played, very much, follow the leader with the United States,” he told Neil Mitchell.

“What we had in the United States on Friday was a fall of 2.7 per cent, and then overnight we had a fall of 2.8 per cent.”

NEIL MITCHELL: “You don’t sound confident that this five per cent drop is going to adjust throughout the day. Are you?”

CRAIG JAMES: “No we’re not going to see probably too much of an improvement.”

Mr James said the drop is “very much a correction” and he expects it to hold.

“Declines of this sort of magnitude, around about five per cent, are likely to hold,” he said.

“A lot will depend on the the US Federal Reserve on Thursday morning our time, to see what sort of interest rate decision they hand down.”

Press PLAY below to hear Craig James on the ASX fall and what’s likely to happen next