ASX tumbles after Wall Street plunge as Australian shares drop, Aussie dollar hits 26-month low
The Australian share market has plunged to a six-week low after the US Federal Reserve indicated it expected to cut interest rates just twice next year, while the Australian dollar hit its lowest level in 26 months.
At 10.40am AEDT on Thursday, the benchmark S&P/ASX200 index was down 166.4 points, or 2.0 per cent, to 8,143.0, while the broader All Ordinaries had fallen 172.8 points, or 2.02 per cent, to 8,384.9.
Overnight the Federal Reserve cut interest rates as expected, although it was a split vote, with one official favouring leaving rates on hold.
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By continuing you agree to our Terms and Privacy Policy.The consensus of its rate-setting committee was for just two rate cuts in 2025, half the number previously predicted.
“As we think about further cuts, we’re going to be looking for progress on inflation,” Fed chairman Jerome Powell told a news conference.
“We have been moving sideways on 12-month inflation.”
Wall Street responded with its worst session since early August, with the S&P500 falling 3.0 per cent and the Nasdaq dropping 3.6 per cent.
Thursday was also on track to be the ASX’s worst session since August 5.
Across the Ditch, Statistics New Zealand shocked with the news that NZ’s gross domestic product fell one per cent in the September quarter, more than double what economists were predicting.
New Zealand’s GDP for the June quarter was also revised downward as well, meaning the country is in a deep recession.
“Today’s forecast miss and subsequent revisions indicate NZ’s economic performance is much worse than previously thought,” J.P. Morgan economist Tom Kennedy wrote.
Every sector of the ASX was in the red, and all but consumer staples was down by at least 1.2 per cent.
Tech was the worst performer, dropping 3.0 per cent.
The Australian dollar was buying 62.02 US cents, from 63.13 US cents at Wednesday’s ASX close.
IG analyst Tony Sycamore said the Aussie dollar had dropped a “jaw-dropping” 10.5 per cent in just over 11 weeks since its September 30 high of 69.42 US cents.
The Aussie was briefly below its current level for a few days in October 2022, when it fell as far as 61.70 US cents, but otherwise hasn’t been this low against the greenback since very early in the COVID-19 pandemic.
