The Wrap: ASX goes into correction with $80b rout

Welcome to your five-minute recap of the trading day and how the experts saw it.

The numbers: The ASX 200 plunged as much as 5.3 per cent on Tuesday, before closing 3.5 per cent lower at 6,686 ensuring the sharemarket officially entered correction territory.

Wall Street futures rescued the local sharemarket from a worse outcome with S&P 500 and Nasdaq 100 futures indicating a jump of more than 1 per cent US Treasuries snapped a sell-off.

All sectors still managed to finish the session lower with the energy sector down more than 5 per cent. Materials and tech dropped more than 4 per cent. All of the big banks and miners took a drubbing with BHP and Fortescue closing down 4.2 per cent and 8.5 per cent, respectively. The Commonwealth Bank dropped 2.8 per cent and Macquarie closed more than 5 per cent lower.

The lifters: Polynovo 7.8%, Domino’s Pizza 2%, Computershare 1.6%

The laggards: Zip Co -15.9%, Block Inc -15.1%, Chalice Mining -14.2%

The lowdown: The size of the drop on Tuesday was partly explained by the fact that the ASX 200 was playing catch up on two days worth of Wall Street mayhem after taking a holiday on Monday. But the biggest factor was that the US markets were telling us that inflation is worse than expected, which means US interest rates will go higher than expected, and the odds of a recession are rising.

Even Australia’s mining stocks were not spared after COVID numbers out of China triggered lockdown worries, yet again.

To give an idea of the impact it had on financial markets, long and short-term interest rates in the US jumped more than 0.5 per cent over two sessions.

CommSec’s Tom Piotrowski said the market had not seen a move of that magnitude since the early 1980s.