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ASX plunges after Wall St tumble

The Australian share market has plunged at the open, with every sector deep in the red following Wall Street’s overnight tumble.

The benchmark S&P/ASX200 index was down 119.1 points, or 1.97 per cent, at 5,930.7 points at 1030 AEDT on Thursday, slipping below the 6,000-point mark for the first time since early June.

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The broader All Ordinaries was down 124.9 points, or 2.03 per cent, at 6,038.9, while the Australian dollar was buying 70.65 US cents from 70.13 on Wednesday.

Tech-related stocks were the biggest decliners, the sector shedding 4.0 per cent following an overnight US session in which tech was badly hit, but the heavyweight financial and materials sectors were also deep underwater.

The energy and consumer staples were also more than two per cent lower, and only gold miners offered any relief as investors sought a safe haven.

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The big four banks were between 1.9 and 1.33 per cent lower, with ANZ leading the quartet lower.

Commonwealth Bank, whose chief executive Matt Comyn was appearing before the House of Representatives economics committee while the market was opening, was the best performing of the big four lenders – albeit down 92 cents at $68.05.

Shares in Macquarie Bank were much worse, though, dropping 3.26 per cent to $118.90.

BHP was down 2.75 per cent at $33.765, a fall only marginally worse than fellow mining giant Rio Tinto’s 2.37 per cent to $77.29.

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The advance of US Treasury yields to more than seven-year highs, as well as escalating fears over US-China trade relations, contributed to the major US indexes all losing more than two per cent overnight.

The Dow Jones Industrial Average fell 706.25 points, or 2.67 per cent, to 25,724.32, the S&P 500 lost 85.47 points, or 2.97 per cent, to 2,794.87, and the Nasdaq dropped 260.3556 points, or 3.36 per cent, to 7,477.6601.

What caused the carnage overnight?

The S&P 500 and the Dow marked their biggest daily declines since February 8.

Technology stocks were at the centre of the carnage as rising US Treasury yields sent investors fleeing from risky assets.

US long-dated Treasury yields rose again in extension of a trend during the past few weeks fuelled by solid US economic data that reinforced expectations of multiple interest rate hikes in the next 12 months.

Investors also worried about the impact of trade tensions on corporate profits and Hurricane Michael’s landfall in Florida adding to the uncertainty.

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The Nasdaq on Wednesday registered its biggest daily drop since June 24, 2016, hurt by technology stocks which had their biggest one-day drop since August 2011.

The S&P 500 ended the day down 3.3 per cent, representing a 4.95 per cent drop from its September 20 record closing high.

“It’s a bit of a bloodbath today, clear risk-off action with few places to hide. Gold is up a little bit. The Vix is up more substantially,” said Ed Campbell, senior portfolio manager at QMA, the asset management branch of Prudential Financial.

“It’s primarily the cumulative effect of interest rate moves over the past five days and news reports about trade impacting companies.

“We saw stocks hanging in there pretty good as interest rates were moving and now they’re starting to crack. Markets are starting to contemplate that this could be a Fed that’s overzealous in terms of interest rate hikes.”

The Dow Jones Industrial Average fell 831.83 points, or 3.15 per cent, to 25,598.74, the S&P 500 lost 94.66 points, or 3.29 per cent, to 2,785.68 and the Nasdaq Composite dropped 315.97 points, or 4.08 per cent, to 7,422.05.

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All three indices hit records between August 30 and October 3. The Russell 2000 small-cap index closed down 2.9 per cent.

The S&P technology sector dropped 4.8 per cent, with Apple Inc creating the biggest drag with a 4.6 per cent decline.

The communications services, consumer discretionary, energy and industrial sectors showed declines of more than three per cent.

The energy sector was one of the biggest losers for much of the day as US oil production was decimated while the industry waited out Hurricane Michael.

The CBOE Volatility Index rose seven points, or nearly 44 per cent, to 22.96, going above 20 for the first time since April 11 and hitting its highest close since April 2.

The best performer was the defensive utilities sector, which closed down 0.5 per cent.

Declining issues outnumbered advancing ones on the NYSE by a 7.27-to-1 ratio; on Nasdaq, a 7.05-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and 47 new lows; the Nasdaq Composite recorded 12 new highs and 227 new lows.

On US exchanges 9.86 billion shares changed hands compared with the 7.42 billion average for the last 20 trading sessions.