The Australian share market has plunged more than 2 per cent deeper into correction territory following interest rate increases in Europe renewing fears about a recession. 

In the first 40 minutes of trade, the All Ordinaries index lost 2.7 per cent to hit 6,608, while the ASX 200 lost 2.6 per cent to hit 6,421.

By midday, the market had come off its lows, with the All Ordinaries down 2.05 per cent to 6,645, while the ASX 200 fell 2.04 per cent to 6,456.

All the sectors were in the red, led down by technology stocks, miners, consumer firms and banks. 

The ASX 200 has lost nearly 7 per cent of its value this week. 

Big banks took a hit, with the Commonwealth Bank (-3.6 per cent) down the most, followed by National Australia Bank (-3.3 per cent), Westpac (-2.5 per cent) and ANZ (-2.1 per cent).

Gold miners Evolution Mining (+5.4 per cent) and Northern Star Resources (+4.6 per cent) were the best performers on the ASX 200 index as investors turned to gold as a safe haven. 

Automotive and water products maker GUD Holdings (-21.2 per cent), KFC owner Collins Food (-6.4 per cent) and car accessories maker ARB Corporation (-6.2per cent) were the worst-performing stocks on the benchmark index. 

Latitude Financial said disruptions in financial markets have seen end its plan to takeover buy now, pay later firm Humm. 

The Australian dollar rose to 70.5 US cents, up 0.6 per cent at 7:20am AEST.

At 12:30pm AEST,  the local currency fell 0.3 per cent to 70.26 US cents.  

Wall Street plunge

US stocks fell deeper into  the red, a day after rallying as the US Federal Reserve raised the federal funds rate by 0.75 per cent.

All 11 sectors on the S&P 500 index fell led down by energy stocks. 

The benchmark index suffered its sixth decline in seven trading sessions, and slipped deeper into a bear market, down more than 20 per cent from its peak. 

Interest rate rises in the United Kingdom, Switzerland, and Hungary reignited fears that attempts by central banks to cool roaring inflation could see the global economy stumble or cause a recession. 

A number of investment banks have warned of the risk of a recession, including Wells Fargo, Deutsche Bank and Morgan Stanley.

But US president Joe Biden has told the Associated Press that a recession is "not inevitable."

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The Dow Jones index lost 2.4 per cent to 29,927, the S&P 500 lost 3.3 per cent to 3,667, and the Nasdaq Composite fell 4.1 per cent to 10,646. 

It was the Nasdaq's fifth single-day decline of 4 per cent or more since May with the index in a bear market. 

Big tech tumbled, led by a big fall from electric car maker Tesla (-8.5 per cent) and computer games maker Nvidia (-9.3 per cent).

"That is what people [are] reassessing today — what is the probability of a potential recession and will corporate profits come in where analysts estimate or will those get taken down," said global investment strategist Tom Hainlin at US Bank Wealth Management's Ascent Private Wealth Group. 

US Treasury yields fell as fears of a recession dented investors' appetite for risk and they turned to the safe haven of government bonds. 

The benchmark 10-year yield (return on bonds) dipped to 3.307 per cent after reaching 3.498 per cent on Tuesday, the highest since April 2011. 

Economic data added to fears of slowing growth as the number of Americans filing new claims for unemployment benefits fell less than expected last week. 

And a Commerce Department report showed US housing starts slumped 14.4 per cent last month to the lowest since April 2021. 

UK rate rise 

The Bank of England raised official interest rates for the fifth time since December by 0.25 per cent to 1.25 per cent, a day after the European Central Bank promised support for debt-laden countries. 

The UK central bank raised rates again despite its concerns about a sharp slowdown in the economy, with inflation in the UK running close to 10 per cent this year. 

Switzerland's central bank, the Swiss National Bank, increased rates for the first time in 15 years by 50 basis points to negative 0.25 per cent.

Negative rates means borrowers pay for the privilege of depositing their money with the central bank. 

Hungary's central bank raised its one-week deposit rate by 0.3 per cent to 6.75% as expected overnight as the bank continues to tighten interest rate policy aiming to curb inflation that is expected to hit double digits in coming months.

European stock markets were also a sea of red. 

The FTSE 100 in London fell 3.1 per cent to 7,045, the DAX in Germany lost 3.3 per cent to 13,039, and the CAC 40 in Paris dropped 2.4 per cent to 5,886. 

Spot gold rose 1.3 per cent to $US1857.09 an ounce, while Brent crude oil increased 0.5 per cent to $US119.12 a barrel at 7:20am AEST. 

ABC/Reuters

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