The local share market has sunk to a six-month low, pressured by soaring bond yields even as the Reserve Bank left rates on hold for a fifth straight meeting.
The benchmark S&P/ASX200 index on Tuesday finished down 89.8 points, or 1.28 per cent, to 6,943.4 - its lowest level since March 20 and leaving it down 1.35 per cent so far this year.
The broader All Ordinaries dropped 94.5 points, or 1.31 per cent, to 7,141.
"It's not a pretty sight," Ausbiz TV anchor Danielle Ecuyer said.
The Australian dollar meanwhile had dropped below 63.30 US cents for the first time since last November, after the Reserve Bank left rates on hold at 4.1 per cent as had been widely expected.
There were only tweaks to the statement that accompanied the RBA's decision, and the minor wording changes did not suggest any material shift in the central bank's key macro forecasts, said RBC Capital Markets chief economist Su-Ling Ong.
In the US overnight, the major indexes erased early gains to finish mixed as 10-year Treasury yields hit 4.68 per cent, their highest level since 2007.
Australian 10-year government bond yields had climbed as high as 4.6 per cent, an 11-year high, before easing to 4.55 per cent following the RBA decision.
Gold fell to a six-month low of $US1,816 an ounce on the soaring bond yields, while Brent crude slid to a three-and-a-half-week low of US$89 a barrel.
JP Morgan's head of international market intelligence, Krupa Patel, said that risk-off was in motion across all regions, driven by hawkish messaging from central banks about interest rates staying high for longer to combat inflation.
Ten of the 11 sectors of the ASX finished in the red with energy the worst loser, dropping 3.7 per cent following the fall in oil prices.
Woodside fell 3.7 per cent to a nearly three-month low of $34.90, while Santos dropped 4.3 per cent a similar low of $7.53.
In the heavyweight mining sector, BHP had dropped 1.7 per cent to $43.84, Fortescue Metals fell 1.6 per cent to $20.73 and Rio Tinto retreated 1.8 per cent to $112.80.
Goldminer Northern Star fell 4.3 per cent to a 10-month low of $10.04 while Newcrest fell 3.2 per cent to a six-month low of $23.71.
As for the Big Four banks, NAB finished down 0.6 per cent to $28.79, Westpac dropped 0.4 per cent to $21.05, ANZ fell 0.3 per cent to $25.41 and CBA dipped 0.2 per cent to $99.69.
Health care was the sole sector in the green, climbing 0.2 per cent, buoyed by companies that make most of their profit in US dollars.
CSL, ResMed and Fisher & Paykel Healthcare rose 1.0, 0.5 and 0.4 per cent, respectively, as the greenback hit a year-to-date high against a basket of other currencies.
The Aussie was buying 63.12 US cents, from 63.97 US cents at Monday's ASX close.
Corpay APAC currency strategist Peter Dragicevich said that the Aussie had been "battered and bruised" by a combination of factors, but it might not take much of a shift in sentiment to see it snap back.
The currency has traded below 63.50 US cents less than two per cent of the time since 2015, he noted.
Looking at the outlook on rates, HSBC chief economist Paul Bloxham said the next critical pieces of information for the RBA would be jobs figures released on October 19 and the third-quarter CPI print on October 25.
He is expecting the central bank to hand down a rate hike next month, on Melbourne Cup Day.
ON THE ASX:
* The S&P/ASX200 index finished Tuesday down 89.8 points, or 1.28 per cent, to 6,943.4
* The All Ordinaries dropped 94.5 points, or 1.31 per cent, to 7,141.0
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 63.12 US cents, from 63.97 US cents at Monday's ASX close
* 94.57 Japanese yen, from 95.84 Japanese yen
* 60.30 Euro cents, from 60.57 Euro cents
* 52.30 British pence, from 52.53 British pence
* 106.83 NZ cents, from 106.92 NZ cents
