Australian shares have touched a seven-week low a day after the country's central bank raised rates, as a slide in commodity stocks and Wall Street weighed on the benchmark index.
The Reserve Bank raised interest rates for a fifth consecutive time on Tuesday, sending its official cash rate to a seven-year high of 2.35 per cent. It also signalled that more hikes will be required to temper surging inflation.
The ASX 200 closed down 97 points or 1.4 per cent to 6,729.
By 4:27 AEST, the Australian dollar was down at 67.16 US cents.
Despite news about strong economic growth in the June quarter, growing 0.9 per cent, almost all sectors ended the session in the red.
Miners led the laggards, falling as much as 2.1 per cent, despite higher iron ore prices.
Index heavyweights such as Rio Tinto, Fortescue and BHP dropped 1.5 per cent to 2.7 per cent.
Energy stocks (-2.9pc) were also pressured by lower crude prices due to prospects of more rate hikes and weaker COVID-led fuel demand in China.
Sector majors like Woodside Energy and Santos slid 3.2 per cent and 1.6 per cent, respectively.
The financial subindex slipped 2 per cent, with the "Big Four" banks falling between 1.4 per cent and 3.1 per cent.
US stocks slide
Wall Street's main indexes closed lower on Tuesday, the first session after the US Labor Day holiday and summer vacations.
The Dow Jones Industrial Average fell 173 points, or 0.6 per cent, to 31,145; the S&P 500 lost 16 points, or 0.4 per cent, to 3,908; and the Nasdaq Composite dropped 86 points, or 0.7 per cent, to 11,545.
A survey from the Institute for Supply Management (ISM) showed the US services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.
However, numbers from S&P Global showed the services sector Purchasing Managers' Index fell short of flash estimates for August.
A stronger-than-expected reading on the US services sector fuelled expectations that the Federal Reserve would keep raising interest rates to tame inflation.
"The Fed has relegated us to being very data dependent, so every piece of information that comes out, investors are going to look not only at the absolute level, but try to infer what that means for when the Fed meets," said Carol Schleif, deputy chief investment officer at BMO Family Office.
"One of the things that is disconcerting to investors is that there's really little to propel markets either up solidly or down solidly."
Concerns over the supply of energy to Europe and how COVID-19 lockdowns will impact China's economy also drove markets down on Tuesday, said Shawn Cruz, head trading strategist at TD Ameritrade.
"A lot of uncertainty and volatility is not coming from the US; it's actually coming from overseas," he said.
The tech-heavy Nasdaq suffered its seventh consecutive day of losses, its longest losing streak since November 2016.
Rate-sensitive shares of Amazon and Microsoft fell about 1 per cent as benchmark US Treasury yields rose to their highest levels since June.
Apple, which will launch new iPhones next Wednesday, lost 0.8 per cent.
Traders see a 74 per cent chance of a third consecutive 75-basis-point rate hike at the Fed's policy meeting later this month, according to CME's FedWatch Tool.
The focus will be on Fed chair Jerome Powell's speech on Thursday (US time) as well US consumer price data next week for clues on the path of monetary policy.
Meanwhile, the pan-European STOXX 600 index rose 0.2 per cent and MSCI's gauge of stocks across the globe shed 0.5 per cent.
In energy, oil prices fell as concerns resumed about the prospect of more rate hikes.
Brent crude oil was down, trading at $US91.56 a barrel, by 4:32pm AEST.
ABC/Reuters
