ASX falls sharply, Wall Street sinks on US-China tension and economic uncertainty

Australian shares have dropped in morning trade, as ongoing economic uncertainty and flaring US-China tensions weighed on global market sentiment.

The arrival of US House of Representatives Speaker Nancy Pelosi in Taipei, despite warnings from Beijing, prompted China to launch war planes and buzz the Taiwan Strait in protest.

The ASX 200 dropped by a steeper-than-expected 1.1 per cent, to 6,921 points, by 10:50am AEST.

Nearly every sector traded lower, with utilities and materials suffering the biggest losses. Seven out of every 10 stocks were in the red.

Some of today’s worst performers include Champion Iron (-5.3pc), APA Group (-3.2pc), Seven Group (-3.2pc) and Eagers Automotive (-3.2pc).

On the flip side, some of the best performing stocks were Pinnacle Investment Mangement (+10.7pc), Block (+4.9pc), and Lynas Rare Earths (+4.6pc).

Aussie dollar sinks

The Australian dollar fell 0.4 per cent, to 68.9 US cents. That was on top of its sharp loss of 1.5 per cent overnight.

The sell-off began yesterday, when the Reserve Bank lifted its cash rate target by 0.5 percentage points, which takes the new rate to a six-year high of 1.85 per cent.

RBA governor Philip Lowe said it was a “high priority” for the bank to bring inflation down from its 30-year high, in yesterday’s post-meeting statement.

But he added that “the size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labor market”.


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