Australian shares have fallen sharply on Thursday, after Wall Street suffered its worst daily sell-off in two years as commodity prices slumped and inflation concerns resurfaced.
Nearly all sectors ended lower, led down by battered consumer stocks.
The ASX 200 index fell 1.7 per cent, to 7,065, while the All Ordinaries index also lost 1.7 per cent, to 7,303.
Retail stocks were the worst performers, including JB Hi-Fi (-6.6 per cent), Wesfarmers (-7.8 per cent), Super Retail Group (-6 per cent) , Woolworths (-5.6 per cent) and Harvey Norman (-5.5 per cent).
The nation's largest companies also posted heavy losses, including Westpac (-4.1 per cent), Rio Tinto (-2.1 per cent), Graincorp (-4 per cent) and REA Group (-3.7 per cent).
Meanwhile, the Australian dollar rose 0.8 per cent to 70.11 US cents amid signs that Shanghai is reopening from its strict COVID-19 lockdown, reversing a more than 1 per cent slump for the currency overnight.
By 4:55pm AEST, it had come off its daily high and was buying 69.77 US cents.
Brent crude oil rose 1.2 per cent to $US110.36 a barrel, while spot gold was weaker at $US1814.21 an ounce.
Woodside investors back BHP oil merger
Woodside Petroleum shareholders overwhelmingly gave their support to the energy giant's merger with BHP's petroleum business, with more than 97 per cent of votes cast in favour of the deal.
The merger will create one of the world's biggest oil and gas producers, worth $US40 billion.
However, nearly half of investors voted against the company's annual climate report, which does not set targets for reducing customer emissions, also known as scope 3 emissions.
Investor advisory group the Australasian Centre for Corporate Responsibility said Woodside was not serious about tackling climate change.
"Woodside has made it very clear to investors that it has no real intention of shifting its business model away from fossil fuels."
Woodside shares fell 2.8 per cent, while BHP lost 1.7 per cent by the close of trade.
Inflation here for 'even longer'
On Wall Street, the Dow Jones index shed 1,165 points, or 3.6 per cent, to 31,490, its heaviest single-day loss since June 2020. It was the lowest close for the Dow since March 2021.
The S&P 500 closed 4 per cent lower, at 3,924, also its worst drop since June 2020.
Since the year began, the benchmark index is down about 17 per cent.
The Nasdaq Composite plunged 4.7 per cent, to 11,418, the largest drop in the tech-heavy index since May 5.
It has also plummeted about 27 per cent in the past five months.
US retailer Target lost a quarter of its value in one trading day, after confirming it was the latest victim of surging inflation.
Its March quarter profit fell by half and the company warned of a bigger margin hit on rising fuel and freight costs.
Its shares fell by 25 per cent, its worst session since the Black Monday crash on October 19, 1987.
"We think the developing impact on retail spending — as inflation outpaces wages for even longer than people might have expected — is a principal factor in causing the market sell-off today," said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute.
"Retailers are starting to reveal the impact of eroding consumer purchasing power."
Interest-rate sensitive mega-cap growth stocks added to recent declines. Tesla, Nvidia, Amazon, Apple and Microsoft all fell sharply.
UK inflation hits 40-year high
European markets also fell sharply, including Britain's FTSE (-1.1 per cent), Germany's DAX (-1.3 per cent) and France's CAC (-1.2 per cent).
The gloomy mood was underscored by a 9 per cent surge in the United Kingdom's consumer prices and a faster-than-expected acceleration in Canada.
British inflation surged to its highest annual rate since 1982 as energy bills soared, according to the Office for National Statistics.
Knock-on effects from Russia's invasion of Ukraine mean those bills are likely to jump again in October.
Last month, the International Monetary Fund forecast Britain in 2023 would face slower economic growth and more persistent inflation than any other major economy.
Meanwhile, Canadian inflation rose to 6.8 per cent last month.
That rise was largely driven by food and shelter prices, which have surged to levels not seen since the early 1980s, Statistics Canada data showed.
Prices are rapidly rising worldwide, forcing central banks to hike interest rates, despite the likely impact on growth.
'Fearful of the next six months'
"The cons outweigh the pros for growth stocks at this particular moment, and the market is trying to decide how bad it's going to get," said Liz Young, head of investment strategy at SoFi.
"The market is fearful of the next six months. We may find out that it doesn't need to be as fearful as this, and markets do tend to overreact on the downside."
Rising inflation, the conflict in Ukraine, prolonged supply chain snarls, pandemic-related lockdowns in China and monetary policy tightening by central banks have weighed on financial markets recently, stoking concerns about a global economic slowdown.
On Wednesday (local time), Wells Fargo Investment Institute said it expects a mild US recession at the end of 2022 and early 2023.
Federal Reserve Chair Jerome Powell vowed on Tuesday that the US central bank would raise rates as high as needed to kill a surge in inflation that, he said, threatened the foundation of the economy.
Traders are pricing in 50-basis point interest rate hikes by the Fed in June and July.
ABC/Reuters
