The Australian sharemarket has plunged more than 5 per cent this morning, putting it on track for its worst day since March 2020, when COVID-19 rattled markets.
The Australian dollar also fell sharply, shedding 1.9 per cent overnight to fall below 70 US cents. At 10.48am AEST, it is fetching 69.47 US cents.
The centre of Wall Street’s focus was again on the Federal Reserve, which is scrambling to get inflation under control. Its main method is to raise interest rates in order to slow the economy, a blunt tool that risks a recession if used too aggressively.With the Fed seemingly pinned into having to get more aggressive, prices tumbled for everything from bonds to bitcoin, from New York to New Zealand, with the sharpest drops hitting the biggest winners of the earlier low-rate era.
It’s all a sharp turnaround from earlier in the pandemic, when central banks worldwide slashed rates to record lows and made other moves that propped up prices for stocks and other investments in hopes of juicing the economy.
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