Australian sharemarket plunges after Wall Street sell-off over inflation data

The Australian sharemarket shed billions of dollars on Wednesday after huge losses in the US.

The Australian sharemarket shed about $60bn Wednesday after huge losses on Wall Street overnight — and it happened in just 10 minutes.

The benchmark ASX 200 opened 0.02 per cent lower on Wednesday and fell by 1.07 per cent, or 74.70 points, to 6935 points — a loss of $58bn — within the first few minutes of trade.

The local bourse was down by 2.83 per cent, or 198.3 points, to 6811.4 points after the first 45 minutes of the session.

It managed to claw back some of its losses by the end of the day to close 2.58 per cent, or 181.1 points, lower at 6828.6 points.

The broader All Ordinaries also sunk, falling by 2.51 per cent, or 181.9 points, to 7071.8 points by the end of the session.

The Australian Stock Exchange in Sydney recorded a heavy drop in the market overnight. Picture: NCA Newswire/Gaye Gerard

The tumble followed a bloodbath in the US where investors were spooked by new data showing US consumer price inflation jumped 8.3 per cent in August — close to a four-decade high.

The figure was higher than the market was expecting, dashing hopes the US Federal Reserve might ease off on the severity of its interest rate hikes, which it has been successively introducing to curb inflation.

All three major indices on Wall Street notched significant losses as a result.

The S & P 500 went down by 4.3 per cent, the Dow Jones sunk by 3.9 per cent and the tech-heavy Nasdaq fell by 5.2 per cent.

It came a fortnight after more hawkish comments from US Federal Reserve bank chairman Jerome Powell.

Mr Powell told the Jackson Hole summit of central bankers the Fed would maintain its breakneck pace of successive rate hikes in a bid to curtail inflation.

The local bourse shed billions of dollars on Wednesday. Picture: NCA Newswire/Gaye Gerard

Nevertheless, the US equity markets had enjoyed a four-day rally this week until the release of the inflation figures.

City Index analyst Tony Sycamore said he thought traders had been “shocked” by what they had seen in the data.

“There was a real hope that we were getting into a mode where the Federal Reserve was going to be able to slow the pace of interest rate hikes,” he said.

“There was a hope that last night’s inflation data would also cool, but headline and core inflation both surprisingly went up.”

The Australian sharemarket followed suit; all 11 local sectors ended Wednesday in the red, with real estate and technology stocks suffering the heaviest losses.

Originally published as Australian sharemarket plunges after Wall Street sell-off over inflation data