ASX endures worst day in three months following major pivot from US Federal Reserve

The ASX cratered after a major decision on a US rate cut, with all 11 sectors trading in the red.

The Australian sharemarket plummeted today following a mass sell-off on Wall Street overnight as investors factor in a less favourable rate environment.

The benchmark ASX 200 index slumped 141.20 points or 1.70 per cent to finish the session at 8168.20 points.

The broader All Ordinaries fell by 143.60 points, or 1.68 per cent, to finish trading on Thursday at 8415.00 points.

Shares in the Australian market plummeted following weakness out of Wall Street. Picture: NewsWire / Damian Shaw

At one stage the Aussie dollar fell below 62 US cents - its weakest level since October 2022.

However it rebounded to 62.25 US cents later in the day.

The Aussie dollar also fell to below 50 British pence and 60 Euro cents.

Australia’s market was not alone in a broad based sell off, with markets across Asia plummeting on the prospect of few rate cuts in the US.

Following the announcement by US Federal Reserve chair Jerome Powell, bond yields rose on the prospects of less rate cuts, while shares fell due to having an inverse relationship with bonds.

Mr Powell said: “With today’s action, we have lowered our policy rate by a full percentage point from its peak and our policy stance is now significantly less restrictive. We can therefore be more cautious as we consider further adjustments to our policy rate.”

Tiger brokers chief strategy officer Greg Boland said the Federal Reserve policy makers unveiled fresh economic predictions and as widely anticipated a slower pace of rate cuts in 2025.

“Every second meeting they produce what is known as a dot plot which shows what each voting participant of the FOMC believes the rates will be at the end of each future year. At the September meeting four rate cuts were expected in 2025,” he said.

“At today’s meeting the FOMC new dot plot shows that the Federal Reserve governors now believe that rates will be only two rate cuts by the end of 2025.”

This change from four rate cuts to two sent markets around the world spiralling down.

The US share market was sold off after the announcement with the S & P 500 dropping by almost 2 per cent from its intraday high, while the technology-heavy Nasdaq fell 3.6 per cent.

The Dow Jones fell 1,123 points or 2.58 per cent. It has now fallen for ten days in a row, making it the longest losing streak since 1974.

The ASX 200 had its worst day in almost 3 months. Picture NewsWire/ Gaye Gerard.

The Falls on the Aussie market were widespread with all 11 sectors trading down. Consumer staples was the best, falling 0.81 per cent, while materials were the worst, trading down 2.27 per cent.

All four of the major banks are down. ANZ was the worst of the big four following its AGM, down 2.55 per cent, although CBA, NAB and Westpac all fell more than 2 per cent.

The major iron ore miners are also trading down with Fortescue leading the falls, down 3.88 per cent, while BHP and Rio Tinto are down 1.47 and 0.92 per cent respectively.

Deep Yellow was the worst performing stock on the ASX down 11.667 per cent following an update on its Tumas project. According to a statement to the ASX the company has delayed its final investment decision on the project until early March 2025.

Buy now pay later shares Block and Zip fell 5.882 and 8.49 per cent respectively, with the latter reversing its strong gains from Wednesday’s trading.

Despite a 171 of the ASX 200 trading in the red, there were some brief bright spots with Credit Corp up 7.646 per cent, while Insignia Financial grew 4.347 per cent.

Originally published as ASX endures worst day in three months following major pivot from US Federal Reserve