So the US central bank stepped up its tough talk to combat inflation and signalled another rate increase this year.
Australian bond futures are now fully priced for a rate rise to 4.35 per cent by March next year and also imply a small chance of a follow-up increase.
Your move RBA…
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The sharemarket fell more than 90 points on Thursday, after still-hawkish rhetoric from the US Federal Reserve sparked a broad sell-off.
The S&P/ASX 200 closed down 98.10 points, or 1.4 per cent, to 7065.2, its lowest level since July 10.
The benchmark is now about 3 per cent down since the start of the week, after falling for four straight sessions.
All 11 sectors finished lower, with financials and energy sectors were among the worst hit, down 1.7 per cent and 1.9 per cent, respectively.
Oil and gas heavyweight Woodside dropped 2.6 per cent as the West Texas oil fell below $US89 a barrel.
Commonwealth Bank, NAB, ANZ and Westpac all tumbled more than 1.5 per cent, with Westpac the worst hit of the big four, dropping 2.5 per cent.
The health care, real estate and materials sectors also fell more than 1 per cent.
In company news, Transurban dropped 3.7 per cent after theACCC blocked its bid for Melbourne’s EastLink toll road.
Shares in Qantas dipped 0.4 per cent to $5.31 and hit its lowest in 11 months. Chairman Richard Goyder said during a TV interview he was not stepping away from his position at the embattled airline and that major shareholders were “supportive”. Shares have plunged 10 per cent this month.
Fonterra’s ASX-listed shareholders fund gained 4.5 per cent after the New Zealand dairy giant unveiled a full-year dividend of 50¢ a share, including interim dividend of 10¢ a share.
Brainchip fell 11.1 per cent adding to steep losses this week after the company dropped out of the S&P/ASX 200 on Monday.