Australian share market is a sea of red as the ASX drops by 2 per cent

The Australian share market has slumped two per cent in opening trade after Wall Street hit a new low for the year and the British pound sunk to 1985 levels.

The Australian Securities Exchange’s benchmark S&P/ASX200 was 1.9 per cent weaker at 6,447.3 points within the first hour of trade on Monday.

The plunge reflected Wall Street’s slump with New York’s benchmark Dow Jones Industrial Average finishing 1.6 per cent weaker after hitting a new low for 2022 and finishing below the 30,000 mark for the first time since June.

This occurred after the US dollar surged to a two-decade high, leading to a sharp-sell-off in energy stocks, which saw diversified mining giant BHP plunge 4.2 per cent to $36.55 as Rio Tinto plummeted 5.1 per cent to $88.25.

Saxo market strategist Jessica Amir said the soaring American greenback convinced investors coal prices would peak this year as the world’s major economies went into recession as a result of rising interest rates.

‘You’ve got the US dollar trading at its highest level in two decades on fears that rising interest rates will put some economics into recession,’ she told Daily Mail Australia. 

‘Everyone pays for oil, coal, wheat – the major 23 commodities are paid in US dollars.’ 

Worries about global inflation and big interest rate rises from the U.S. Federal Reserve.

Global risk appetite took another hit as the UK pound sterling fell to the lowest level since 1985 after new Conservative Prime Minister Liz Truss and her new Chancellor of the Exchequer Kwasi Kwarteng unveiled a mini budget with big tax cuts, fuelling concerns about worsening inflation.