Australian shares had their worst day in more than a year, caught up in a global rout after investors were spooked by the US Federal Reserve’s clearest signal yet for a possible end to its multitrillion-dollar stimulus program.
The benchmark S&P/ASX200 slid 103 points, or 2.1 per cent, to 4758.4, their biggest drop since May 2012. The broader All Ordinaries fell 97.9 points, or 2 per cent, to 4743.9. The sell-off wiped nearly $30 billion off the share market's value.
The global rout started on Wall Street after Fed chairman Ben Bernanke outlined the roadmap for a potential pull-back if the economy improved as expected, indicating that the Fed could start winding back its $US85 billion-a-month cash stimulus program as early as September.
That triggered a big sell-off of US equities, a movement into bonds, a stronger US dollar and weaker Australian dollar, which makes holding Australian equities less attractive to foreign investors.
The dollar plunged more than 3 cents to a 33-month-low of 92.25 US cents in late local trade.
‘‘Rather than anything with logic, people have been throwing out the baby with the bathwater,’’ said RBS Morgans senior trader Luke McElwaine.
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