$28b wipeout and wild ride to come

NERVOUS investors stripped almost $28 billion from the Australian share market yesterday in a broadbased selling spree that, analysts warn, likely heralds “a more volatile year”.

The benchmark ASX 200 index fell 1.6 per cent in its deepest single-session fall since June.

It followed a bleak session overnight Friday on Wall Street, where the Dow Jones Industrial Average slumped 2.5 per cent.

That fall came amid grow- ing fears central bankers in the US would have to hike interest rates faster than thought to ward off a surge in inflation.

The Dow shed almost 666 points — its biggest singe-session points fall since December 2008, at the nadir of the financial crisis. By percentage, it was the heaviest fall in 20 months.

It came after official figures out of the US revealed more people found work than expected last month, while wages climbed at their fastest clip in more than eight years.

That triggered a sell-off in bonds — a sign traders are an- ticipating more rapid increases in interest rates from the US central bank, the Federal Reserve — which spilt into the share market.

At home, the slide in the ASX 200 wiped $27.9 billion from the value of Australia’s leading companies.

The broader All Ordinaries index suffering its deepest single-session fall since November 2016, shedding 101.4 points — also 1.6 per cent.

AMP chief economist Shane Oliver said the US share market was “long overdue” a correction, and that sentiment had reverberated through the Australian market.

“This [correction] now appears to be unfolding and may have further to go as higher inflation, a slightly more aggressive Fed and higher bond yields are factored in,” Dr Oliver said.

“However, the pullback is likely to be just an overdue correction — with say a 10 per cent or so fall — rather than a severe bear market.”

Dr Oliver said he believed the stockmarket would finish the year in positive territory, but it was “likely to be a more volatile year than last year”.