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Australian share market plunge sheds two years of gains

Wall Street plummeted ahead of the widely-expected Fed rate hike on Thursday morning (AEDT).

Wall Street plummeted ahead of the widely-expected Fed rate hike on Thursday morning (AEDT). Photo: AP/Richard Drew

The Australian share market has plunged in early trade, wiping out all its gains in the last two years.

Australia’s benchmark index, the ASX 200, had fallen by 1.2 per cent to 5,593 at 10:50am (AEDT).

The broader All Ordinaries index tumbled by a similar level to 5,667 points — in dollar terms, that was a $20 billion loss.

It follows a volatile session on Wall Street overnight, as it continued to fall deeper into correction territory.

The Dow Jones index shed 508 points and the benchmark S&P 500 fell to a 14-month low.

Investors are on edge about a potential recession in the United States, and the Federal Reserve’s widely expected rate hike on Wednesday afternoon (New York time).

Every Australian sector is in the red, with energy (-2.3pc) and financials (-1.7pc) among the worst performers.

Origin Energy (-1.8pc), Santos (-2.3pc), Bluescope Steel (-3.6pc) and Fortescue Metals (-2.2pc) are some of the big-name stocks that have fallen by the most.

The major banks — ANZ (-2.5pc), NAB (-1.6pc), Westpac (-1.4pc) and Commonwealth Bank (-1.4pc) — are the biggest drag on the local bourse.

The Australian dollar has risen slightly to 71.77 US cents.

Wall Street woes

Wall Street earlier plunged as investors grew increasingly worried the US central bank could be raising interest rates too quickly.

The Federal Reserve is widely expected to announce a rate hike on Thursday morning, its fourth this year, amid fears the US economy is slowing and could face a recession within years.

US President Donald Trump’s latest attack on the Fed’s monetary policy did not help market sentiment.

Mr Trump tweeted: “It is incredible that with a very strong dollar and virtually no inflation … the Fed is even considering yet another interest rate hike. Take the Victory!”

At its worst, the industrial-skewed Dow Jones index fell nearly 600 points overnight, before slightly moderating its losses.

The Dow closed 508 points lower, down 2.1 per cent to 23,593.

The benchmark S&P 500 dropped 2.1 per cent to 2,546, erasing all the gains it made in the past 14 months — since October 2017.

Meanwhile, the tech-heavy Nasdaq index lost 2.3 per cent to 6,754. It was dragged down by Microsoft (-3pc) and the ‘FAANG’ stocks — Facebook (-1.3pc), Amazon (-4.5pc), Apple (-0.9pc), Netflix (-1.5pc) and Google (-2.5pc).

All three indices have fallen deeper into correction territory since their values peaked around September.

Goldman Sachs shares have sunk 2.8 per cent to a two-year low of $US167.88.

This was after Malaysia filed criminal charges against the US investment bank, and two of its former partners, in relation to the 1MDB money-laundering scandal.

Johnson & Johnson shares dropped by another 2.9 per cent, following reports the pharmaceutical giant knew for decades its baby powder products contained asbestos.

ABC

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