In its third-biggest percentage fall in the past 17 months, the Australian share market plummeted deep into a sea of red on Tuesday, with Financials and Energy being the worst-performing sector, with Woodside down -4% and Santos down -4.8%.
The benchmark S&P/ASX 200 index dropped to an 8-month low, losing -177.9 points, or -2.49%, to 6,961.6, while the All Ordinaries erased -193.4 points, or -2.60%, to 7,248.1, wiping about $63 billion off its market value, while our local currency, the Australian dollar, is currently buying US$0.7148.
The “Fab Four” banks plummeted, with ANZ losing -3.6% and National Australia Bank losing -2.9%.
In economic data, according to the Australian Bureau of Statistics (ABS), Australia’s Q4 inflation data release came in stronger than expected during early Tuesday’s session.
The Consumer Price Index (CPI) rose more than 1.0% forecast and 0.8% Q/Q to 1.3%, while the RBA Trimmed Mean CPI crossed 0.7% market forecast to 1.0% on Q/Q, with the previous release at 0.8%.
Eyes now turn to the policy-setting Federal Open Market Committee (FOMC), which convenes its two-day monetary policy meeting on Tuesday.
At its conclusion on Wednesday, market participants will be parsing its concluding statement and U.S. Fed Chairman Jerome Powell’s subsequent Q&A session for clues as to the central bank’s timeline for hiking key interest rates to combat inflation.
Market participants expect the U.S. central bank to signal that rates will likely rise as soon as March.
Australian financial markets will stay closed on Wednesday for Australia Day.