The benchmark ASX 200 index, which tracks Australia's 200 largest companies, fell by over 360 points on Tuesday, a drop of just over 5.2 percent. The loss has since rebounded to 300 points or around 4.3 percent.
Nonetheless, it marks the largest one-day drop since March 2020 when the COVID-19 pandemic triggered global recession fears.
On Monday in the United States, the S&P 500, which tracks the nation's 500 largest listed companies, fell 3.9 percent. A decline of more than 20 percent since the beginning of the year, the threshold for a bear market.
The sell off has been attributed to three core factors: the U.S. central bank lifting interest rates, U.S. inflation exceeding expectations at 8.6 percent in May, and widespread fears that a global recession is imminent.
A note from Australian retail bank, Australia and New Zealand Banking (ANZ), on Tuesday said the sell-off has prompted a slump in stock prices and a surge in government bond yields.
"GDP growth meanwhile is due a downgrade. Higher inflation, slower growth and higher interest rates are a damaging combination for financial assets."
"Until evidence emerges that inflation is peaking and on a sustained downwards track, financial asset prices will remain under pressure."
Latest comments