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Surging prices — and the possibility of looming interest rate hikes — are rattling global markets and tech stocks, while the price of Bitcoin has tanked to below $US27,000 ($39,000).

The Australian share market is tracking this global sentiment.

At 1pm AEDT, the ASX 200 was down 1.1 per cent. The All Ords had lost similar.

By end of the day, it was even further down.

The ASX 200 closed 1.75 per cent down at 6,941 points. That was a 50-day low.

The worst-performing stocks included Altium (-16.6pc) and Xero (-13.2pc).

Overall, the All Ords also lost 1.9 per cent. This equates to $46 billion being wiped out in a day.

Tech stocks were the worst-performing with the sector down 8.9 per cent overall. That followed the trajectory of the Nasdaq in the US.

Why did the markets drop?

The tech-heavy Nasdaq dived 3 per cent in the US on Wednesday (local time) as the latest inflation data there was released.

It showed the cost of everyday necessities, including food and housing, is still rising in the United States, with inflation there now sitting at 8.3 per cent annually.

Further interest rate hikes are now being tipped, after the data for April showed that inflation in the US was not slowing as quickly as many experts were anticipating. 

Meanwhile, the Dow Jones and S&P 500 lost 1 per cent and 1.6 per cent, respectively.

The tech losses are being replicated in the cryptocurrency market.

Bitcoin has fallen sharply again this week.

It’s lost more than a third of its price in a week, diving from above $US40,000 to less than $US27,000 by 4:30pm AEST.

This latest crash prompted the founder of one of the largest holders of Bitcoin to post a photo of himself working at McDonald’s.

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The Australian dollar also hit a low of 68.80 US cents.

City Index senior market analyst Tony Sycamore said it appeared cash was being put into the “haven” of the American greenback.

“US 10-year yields are trading at 2.87 per cent after trading as high as 3.20 per cent three days ago.”

What did the US inflation data show?

In April, data showed the CPI rose by 0.3 in the US. The rise came even with a big decrease in the price of fuel, and surpassed many economists’ predictions.

This puts the annual US inflation rate at 8.3 per cent.

While these rates did surprise markets, they still show the surge in price hikes is starting to calm down from earlier this year.

The April rise was significantly below the 1.2 per cent increase in March, when fuel prices were hitting global economies.

Increases in the cost of housing, food, airline tickets and new cars were some of the biggest factors behind the April price rises. 

Posted , updated 



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