ASX200 a sea of red after US Fed’s call on future rate cuts kills the Santa rally

The ASX200 nosedived on Thursday following a disastrous lead from Wall Street overnight that saw all three major US indexes post their biggest daily decline in months.

Australia’s leading index was a sea of red in the first hour after the opening bell, with energy, mining and banking stocks leading the sharp retreat. But listed IT companies copped the biggest shellacking, down almost 3 per cent.

The index plunged almost 2 per cent after the first hour of trade and had only managed a marginal recovery shortly before the close

It was still down 1.9 per cent to 8152.4 points at 12.30pm — a six-week low after a run of fresh record highs.

The early rout has left the ASX200 on track for its worst session since August 5.

Uranium miner Deep Yellow was the biggest loser, down 11.5 per cent to $1.06, followed by Megaport, which dropped 10.3 per cent to $7.47.

Zip Co, West Gold Resources and Star Entertainment rounded out the top five laggards — all down more than 6 per cent.

Credit Corp Group led the gainers, up 7.8 per cent to $1.18¢. Insignia Financial was second-best, up 3.2 per cent to $3.56.

Champion Iron, Paladin Energy and The A2 Milk Co were also among the top-five winners.

The negative lead from the US came after the Federal Reserve cut interest rates by a quarter of a percentage point but disappointed some investors with projections that signalled a more cautious path of easing in 2025.

The Fed cut rates by 25 basis points to the 4.25 to 4.50 per cent range and its summary of economic projections indicated it will make rate cuts totalling a half percentage point by the end of 2025 given the solid labour market and the recent stall in lowering inflation.

Among the big miners, Fortescue was down 4 per cent to $17.82, BHP was off 1.8 per cent to $39.56 and Rio Tinto was down 1.1 per cent to $117.14.

The Australian dollar was buying US62.02¢., from US63.13¢. at Wednesday’s ASX200 close.

IG analyst Tony Sycamore said the dollar had dropped a “jaw-dropping” 10.5 per cent in just over 11 weeks since its September 30 high of US69.42¢.

The Aussie was briefly below its current level for a few days in October 2022, when it fell as far as US61.70¢., but otherwise hasn’t been this low against the greenback since very early in the COVID-19 pandemic.