The S&P/ASX 200 has fallen more than 3 per cent this week as the plunge in bank shares drags the benchmark to one of its worst weeks since the pandemic began.
P/ASX 200 index fell 1.25 per cent to 6932 points on Friday, extending the weekly loss for the blue-chip benchmark to 4.2 per cent, its biggest weekly tumble since April 2020 and one of the worst since the pandemic began.
The pain for the banks reflected investor concerns about the effects of tighter monetary policy from the RBA, which surprised economists and investors with a 50 basis point increase to the cash rate on Tuesday. Higher rates are expected to weigh on Australia’s property market, in turn affecting lenders’ mortgage books.
Investor sentiment was dampened by Thursday’s decision from the European Central Bank to signal imminent interest rate increases alongside higher projections for inflation and lower growth forecasts.The ECB said it will likely raise its key rate by 25 basis points in July and will consider a larger increase later in the year. The news weighed European shares, which fell to a two-week low on Thursday.
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