Australia's share market has erased almost $60 billion in value in a day as soaring bond yields foreshadow higher global borrowing costs, hammering cyclical stocks.
The S&P/ASX200 tumbled 174.9 points on Thursday, down 1.99 per cent, to 8,614.4, as the broader All Ordinaries lost 174.8 points, or 1.95 per cent, to 8,794.4.
The move wiped $59.67 billion from the top-500 stocks' combined $3.1 trillion market cap, and left both leading indices at their lowest levels since June.
Investors had nowhere to hide as all 11 sectors bled lower.
Even defensive groups such as health care and consumer staples dropped more than two per cent, along with financials segment, real estate trusts and energy stocks, which dived more than three per cent.
"The relief rally following Wednesday's softer-than-expected inflation print appears to have run out of steam," Global X ETF strategy analyst Joseph Marassa said.
"Interest-rate sensitive sectors that led the market higher after the (Wednesday) inflation data reversed course, with real estate securities among the worst performers."
The plunge came as global bond yields continued to track inflation risks higher, elevating future borrowing costs and constraining the growth outlook, hitting the cyclical-dominated ASX200 particularly hard.
Oil prices eased over the session but remain elevated with the Brent contract trading above $US97 a barrel, up from around $US70 before the conflict began.
While Middle East oil flows had recovered significantly since the onset of the US-Iran war, only a sustainable breakthrough could temper markets' geopolitical risk premium and ease crude prices, Capital.com senior market analyst Kyle Rodda said.
"That takes pressure off yields, off valuations, off cyclical areas of the market, and that could be a really big positive if the US and Iran can strike something up," he told AAP.
"Obviously, it's a big 'if' whether it happens or not."
However, with stock indices in Asia trading higher over the day, some said internal factors had been more important to the dire market performance.
"It appears to reflect deepening despondency over the Australian economic and corporate earnings outlook, given falling house prices, higher interest rates, and our low exposure to the vibrant AI sector," Betashares chief economist David Bassanese said.
"With growth likely to remain below trend and inflation proving sticky, investors may want to be more selective about Australian shares."
In company news, shares in rare earths explorer Meteoric Resources rocketed almost 50 per cent higher after announcing a $968 million buyout by Lynas.
Also in acquisitions, Ampol will buy electric vehicle charging company Evie Networks for $225 million.
The Australian dollar is buying 69.53 US cents, down from 69.71 US cents on Wednesday at 5pm.
ON THE ASX:
* The S&P/ASX200 fell 174.9 points, or 1.99 per cent, to 8,614.4.
* The broader All Ordinaries lost 174.8 points, or 1.95 per cent, to 8,794.4.
One Australian dollar trades for:
* 69.53 US cents, from 69.71 US cents at 5pm AEST on Wednesday
* 109.95 Japanese yen, from 109.35 Japanese yen
* 61.43 euro cents, from 61.42 euro cents
* 52.43 British pence, from 52.60 pence
* 123.69 NZ cents, from 123.36 NZ cents
