The Australian stock market dropped sharply in early trading after investors were spooked by the outlook for interest rates, after a worse-than-expected US inflation report.
At 10.47am, the benchmark S&P/ASX200 had shed 198.5 points, or 2.83%, to a one-week low of 6813.5.
The broader All Ordinaries had dropped 196.3 points, or 2.7%, to 7057.4.
<p lang=«en» dir=«ltr» xml:lang=«en»>Sharp fall in Aust shares at the open-but worth putting it in context as it just takes us back to where we were last wk. The mkt likely remains vulnerable to further falls in short term given inf/rates/recession risk. & it is September!…with seasonality normally better from Nov pic.twitter.com/jqiqo9SiaQEvery sector was down by at least 1.4%, with tech shares down by 3.6%, consumer discretionary shares down by 3.0% and mining down by 2.8%.
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In the US overnight, the S&P500 tumbled 4.3% – in its worst trading day since 11 June 2020 – after the monthly consumer price index came in higher than expected, despite falling fuel prices.
“There is no way the Federal Reserve can moderate its policy tightening or ease its overtly hawkish forward guidance,” ANZ economist Adelaide Timbrell said in a client note.
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The US market is now anticipating that the US Federal Reserve will dish out another 75 basis point interest rate hike next week, Timbrell said, and there’s even a chance for a 100 basis point hike.
Global markets had been gaining since late July based on optimism that inflation had peaked and central banks
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