The Australian share market has lost nearly $60 billion in a single day, and Wall Street has lost trillions as investors took flight amid concerns that more official interest rate hikes would not be enough to curb surging inflation.
The delayed reaction in the US came a day after the US Federal Reserve raised the federal funds rate by 50 basis points and Fed chairman Jerome Powell said there were more half-a-per-cent rate increases to come over the next couple of months.
Traders raised their bets of a 75-basis-point rise in June, even though Mr Powell all but ruled that out.
Rising interest rates, the war in Ukraine, COVID-19 lockdowns in China are all weighing on investor confidence.
The Dow Jones Industrial Average plunged 3.1 per cent, to 32,998, the S&P 500 dropped 3.5 per cent, to 4,147, and the Nasdaq plummeted 5 per cent, to 12,318, reversing yesterday's rally.
That's the lowest level for the Nasdaq since November 2020 and the lowest for the Dow since October 2020.
All 11 major S&P industry sectors declined, with consumer discretionary stocks leading the falls.
The VIX volatility index climbed to 31.20 points.
Big tech companies were sold off — including Google, Apple, Microsoft and Amazon — because higher interest rates will increase their borrowing costs, and tech firms have relied on cheap finance to expand.
That saw $1.3 trillion ($1.8 trillion) wiped off the value of the world's biggest technology firms.
Payments firm Block plummeted to a first-quarter loss as cryptocurrency bitcoin prices declined.
Block made a net loss of $US204 million, or 38 US cents a share, compared with a profit of $39 million a year earlier.
Its shares lost 10 per cent, but it regained ground in after-hours trade, as investors examined the results in more detail and liked what they saw.
Twitter was one of the few stocks to rise after billionaire Elon Musk lined up a diverse group of investors to back his $US44 billion takeover bid for the social media platform.
Among them are Oracle co-founder Larry Ellison and a Saudi Arabian prince.
Documents also show that Mr Musk is in talks with Twitter founder Jack Dorsey to sell some of his shares to Mr Musk.
ASX plunge
Australian shares fell sharply after the Wall Street rout, with just five stocks rising on the ASX 200 at midday.
By the close, the market came off its lows.
The All Ordinaries index fell 2.3 per cent, to 7,468, and the ASX 200 index lost 2.2 per cent, to 7,206.
All 11 industry sectors ended in the red, led lower by technology, real estate investment trusts, healthcare firms and miners.
The benchmark index is down 3.1 per cent for the week and by 3.2 per cent so far this year.
Burman Invest chief investment officer Julie Lee said nearly $60 billion was wiped from the value of the market today with technology and health stocks bearing the brunt of the selling.
"So, in the tech space, where we are seeing some companies still unprofitable, that is being hit hard because future growth is being discounted."
The biggest loser on the ASX 200 was uranium producer Paladin Energy (-10.3 per cent), followed by app firm Life360 (-9.5 per cent) and cloud software firm Xero (-9.1 per cent).
News Corporation fell (-7.8 per cent), despite posting record revenue and profit for the third quarter.
The company made $2.5 in revenue over the quarter, up 7 per cent from the same time a year ago as its news media division continued to benefit from a rebound in the advertising market.
The best performers were medical device firm Polynovo (+4.1 per cent), Fisher & Paykel (+2.7 per cent), and supermarket giant Coles (+1 per cent).
Taking hits today on the market were real estate firms REA Group (-8.1 per cent) and Domain (-1.8 per cent) because higher borrowing costs are bad for property demand.
REA saw quarterly revenue rise to $278 million, up from $226 million for the same time last year.
The company said the value of trial commissions would be lowered by increased mortgage run-off rates.
All the big banks were lower, despite a rising interest rate environment being good for them because it increases their revenue.
National Australia Bank (-2 per cent) did the worst, followed by followed the Commonwealth Bank (-1.3 per cent), then Westpac (-0.8 per cent) and ANZ (-0.6 per cent).
Meanwhile, the Australian dollar was sold off on the worsening global and local economic outlook, dropping more than 2 per cent overnight.
It fell below 71 US cents after Reserve Bank cut its forecasts for unemployment and significantly raised forecasts for inflation, saying that inflation could reach 6 per cent by December.
The RBA said further interest rate increases were needed to restrain inflation.
At 4:50am AEST, the Australian dollar was down 0.4 per cent to around 70.83 US cents.
Macquarie record profit
Investment bank Macquarie Group saw annual profit jump by more than half amid a surge in commodity prices because of the war in Ukraine.
Net profit for 2022 jumped 56 per cent from 2021, rising to a record $4.7 billion, with income from commodities and international divisions contributing the lion's share of revenue.
Investors get a final dividend of $3.50 a share for the half year, making a final dividend for the year of $6.22 a share, 40 per cent franked.
Macquarie Group chief executive Shemara Wikramanayake said it was a good result despite heightened volatility for commodities, including the soaring oil price.
"We had the recovery out of COVID where demand for goods surged and we had some challenges on the supply side. We then had the Russia-Ukraine issue," Ms Wikramanayake said.
However, the Macquarie boss also warned that income from commodities would be "significantly down", and takeover deals would also drop in the current financial year.
Macquarie shares fell 7.8 per cent because of the profit warning.
Asian markets
In Hong Kong, the Hang Seng index lost 3.6 per cent to 20,052, while the Shanghai Composite fell 2 per cent to 3,005.
The Nikkei 225 in Japan recovered after a morning slump, and rose 0.7 per cent to 27,004.
In Asian trade, Brent crude oil continued to rise.
It put on 1.1 per cent to $US112.05 a barrel, while spot gold fell 0.2 per cent to $US1873.65 an ounce at 4:50pm AEST.
Bank of England rate hike
With inflation climbing to 10 per cent because of Russia's invasion of Ukraine and China's COVID-19 lockdowns, the Bank of England has lifted its official interest rates to a 13-year high.
The UK central bank's Monetary Policy Commission approved a 25-basis-point rise by a majority of six to three, which took the benchmark interest rate to 1 per cent.
Its three dissenting members wanted a rise of 0.5 per cent because inflation has been running at 7 per cent in the UK due to the higher cost of goods, especially fuel.
It was the fourth rise since December.
"Global inflationary pressures have intensified sharply following Russia's invasion of Ukraine," the bank said.
"This has led to a material deterioration in the outlook for world and economic growth."
The FTSE rose 0.1 per cent, to 7,503, the DAX in Germany dropped 0.5 per cent, to 13,903, while the CAC 40 in Paris lost 0.4 per cent, to 6,368.
Meanwhile, the pound plunged as the BOE warned about the risk of a recession.
ABC/Reuters
