The Australian share market lost $67billion in the opening half hour of trade as interest rate rise fears and China’s lockdowns caused an initial 2.5 per cent plunge.
The benchmark S&P/ASX200 bled after Wall Street continued to plummet.
The 2.5 per cent fall on the local share market was less severe than the 3.2 per cent drop on New York’s S&P 500.
But it still caused a $67billion plunge in the value of Australian shares in the top 200 companies by 10.30 on Tuesday morning, just half an hour after the market opened.
CommSec market analyst Steven Daghlian said share markets had reacted badly to the US Federal Reserve last week raising a key interest rate by a half a percentage point – the biggest increase in 22 years.
‘It’s contributed to it. Markets more broadly are just getting used to that idea that rates have already increased and they’re going to probably continue to do so,’ he told Daily Mail Australia.
‘For a while we’ve been talking about higher rates and now it’s at the point rates are actually rising.’
The US rate rise came just days after the Reserve Bank of Australia raised the cash rate by 0.25 percentage points, marking the first increase since November 2010 and ending the era of the record-low 0.1 per cent cash rate.
‘Obviously rough day: we’ve got all 11 sectors down,’ Mr Daghlian said.
The mining and energy companies in particular are falling quite heavily – that’s a reflection of commodity prices which have been falling and concern there are still tight restrictions in Beijing and Shanghai.’
China, Australia’s biggest trading partner, is the biggest buyer of iron ore, the commodity used to make steel.
The Australian share market is on track to finish weaker for the third straight session and is now down 5.8 per cent compared with the start of 2022.
In just three days, however, the market had lost about five per cent of its value at the worst point on Tuesday.