The high-flying tech sector slumped to a five-month low as surging borrowing costs continued to undermine equity markets.
The pandemic's best performing sector slid 3 per cent to a level last seen in early October.
The S&P/ASX 200 shed 76 points or 1.12 per cent following sharp falls in the US. Today's setback slashed the index's advance for the week to 12 points or less than 0.2 per cent
What's driving the market
Growth stocks priced for future earnings have been hammered in recent days as rising bond yields impact valuations. Overnight, the Nasdaq Composite tumbled 2.11 per cent, extending its retreat from its peak to more than 10 per cent. The broader S&P 500 shed 1.34 per cent.
The declines came after Federal Reserve Chair Jerome Powell indicated the central bank was comfortable with rising yields so long as the market remains orderly. Investors hoping for policy tweaks to depress long-term yields dumped bonds and equities.
"If it felt we were in the eye of the storm earlier this week, we are waist-deep in the policy repricing soup now," Stephen Innes, Chief Global Market Strategist at Axi, said. "Investors are worried about the perpetual printing machines of easy monetary policy throttling down."
The domestic technology sector tripled in value during the pandemic as investors sought pockets of the market protected from the worst effects of the economic collapse. The sector has fallen out of favour amid questions about valuations once borrowing costs started to rise. Today's decline extended the sector's fall from last month's peak to 20 per cent.
"In a rebalancing trend that started last month, high flying tech shares are the first to buckle as torrential policy downpours hit the ground from the foreboding gathering of rate hike fevered thunderheads roiling above," Innes said.
Afterpay slumped 3.9 per cent, Nearmap 3.4 per cent, Altium 2.7 per cent and Xero 2.3 per cent. Bravura Solutions and Megaport resisted the downtrend with gains of 2.4 and 2.2 per cent, respectively.
The energy sector jumped 1.9 per cent after the OPEC+ oil cartel extended production caps that supported the recovery in prices. Brent crude surged to a 13-month high. Here, Santos climbed 4 per cent, Oil Search 3.2 per cent and Woodside 2.3 per cent.
Utilities have been hammered by weak profit results and the market's interest in stock with more upside in a recovery. The sector bounced 0.7 per cent this morning from its lowest level in seven years. APA Group gained 0.5 per cent, AusNet 1 per cent and AGL 2.3 per cent.
Heavyweight risers included Coles +1.4 per cent, Woolworths +0.3 per cent and Brambles +0.3 per cent. ANZ was the best of the banks, edging up 0.9 per cent. CBA fell 0.5 per cent, NAB 0.3 per cent and Westpac 0.6 per cent.
The deterioration in risk appetite was underlined by sharp falls in speculative stocks and small caps. The S&P/ASX Emerging Companies Index dived 3.4 per cent to its lowest level since December. The Small Ords dropped 2.2 per cent to a one-month low. Both indices contain companies whose valuations reflect future earnings.
At the heavyweight end of the market, CSL shed 3.4 per cent, Macquarie Group 2.2 per cent, Transurban 1.6 per cent and Wesfarmers 1 per cent. Among the miners, Rio Tinto fell 4 per cent, BHP 2.8 per cent and Fortescue 1.5 per cent.
Lithium stocks have been among the recovery's best performers, but met a wall of selling today. Piedmont Lithium tumbled 17.7 per cent, Galaxy Resources 12.7 per cent and Orocobre 9 per cent.
A rough session for the BNPL sector saw Z1P Co shed 6.1 per cent, Sezzle 5.8 per cent and Humm 2 per cent.
US futures showed no evidence of a looming rebound. S&P 500 futures fell 26 points or 0.7 per cent. Nasdaq futures dived 114 points or 0.9 per cent.
The Asia Dow fell 1.56 per cent. China's Shanghai Composite gave up 1.15 per cent, Hong Kong's Hang Seng 1.95 per cent and Japan's Nikkei 1.95 per cent.
Oil held its overnight gains. Brent crude marked time this morning at $US66.74 a barrel. Gold fell $13.60 or 0.8 per cent to $US1,687.10 an ounce.
The dollar fell under 77 US cents, lately down 0.3 per cent to 76.91 US cents.