Aussie equity investors continued to dump risky assets as worries of more aggressive tightening by the U.S. Federal Reserve mount on market sentiment. Australia's benchmark index, the S&P/ASX 200 (XJO), fell 2.49% to close at an 8-month low of 6,961.6 on Tuesday. Investors also weighed the prospects of rate hikes in Australia after the country?s core inflation accelerated above the central bank target at 2.6% in the fourth quarter of 2021.
Nearly all sectors sub-indices of the XJO dropped, led by losses in energy (-4.07%), technology (-3.22%), mining (-3.12%), and financial (-2.68%). Notable decliners include Commonwealth Bank (-2.74%), CSL (-2.18%), BHP Group (-1.25%) and National Australia Bank (-3.74%).
Market jitters spilled over into Australian Equity ETFs as investors pull out over US$350 million from ETFs with exposure to the main S&P/ASX 200 index in the first three weeks of the year. On Tuesday, iShares Core S&P/ASX 200 ETF (IOZ) and SPDR S&P/ASX 200 FUND (STW) fell by more than -2.4% each (in A$ terms). Meanwhile, European ETFs with similar exposure, including the Xtrackers S&P ASX 200 UCITS ETF (XAUS) and Lyxor Australia (S&P/ASX 200) UCITS ETF (AUST) have been trending higher (11:00 AM, GMT +1) since the EU markets opening bells.
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