The local share market has dropped to its lowest level in two months as sentiment soured and hotter-than-expected domestic inflation data was seen as increasing the odds of another rate hike.
The benchmark S&P/ASX index closed Wednesday down 118 points, or 1.64 per cent, to 7,091.3 - its lowest level since March 29.
The sell-off was the market's worst since March 10.
It has now lost ground in six of the past eight sessions amid concerns about a potential US debt default and economic growth in China.
The index dropped 3.0 per cent across the course of the month, fulfilling the adage "sell in May and go away".
The broader All Ordinaries on Wednesday fell 113.8 points, or 1.54 per cent, to 7,273.5.
The ASX200 was already down by more than 1.0 per cent on Wednesday morning when the Australian Bureau of Statistics reported the higher-than-expected April inflation data shortly before lunchtime.
Consumer prices rose 6.8 per cent in the 12 months to April, the ABS said, with rents, food and non-alcoholic beverages and petrol prices fuelling the rise.
Economists had predicted just a 6.4 per cent rise and following the readout, the market priced the odds of another rate hike by the Reserve Bank on Tuesday at one in three - up from one in 10.
"Our central case has the RBA on hold in June and the months that follow, (but) today's figures add to the risk that another hike is delivered in coming months," HSBC chief economist Paul Bloxham wrote in an analysis.
Every sector of the ASX finished lower except for tech, which was basically flat.
Energy was the biggest loser, falling 2.5 per cent as oil prices fell to a three-week low amid concerns about the durability of the US debt ceiling deal, which still needs to pass Congress.
Woodside dropped 2.3 per cent to $34.30, Santos fell 2.7 per cent to $7.29 and Whitehaven Coal racked up the biggest losses among the ASX200, retreating 6.5 per cent to a 10-month low of $5.66.
Weaker-than-expected Chinese manufacturing data known as the Purchasing Managers' Index that showed factory activity contracted in April also dragged on commodity prices and, in turn, the mining sector.
BHP fell 3.4 per cent to $42.02, Fortescue dropped 3.0 per cent to $19.22 and Rio Tinto closed down 2.1 per cent at $107.
Lithium producers were mostly in the red but gold miners generally finished in positive territory, with Northern Star climbing 1.8 per cent at $12.91.
All of the big banks were significantly lower, with CBA down 2.4 per cent to $96.78, Westpac dropping 2.0 per cent to $20.68 and NAB and ANZ both falling 2.1 per cent, to $25.97 and $22.92.
Bank of Queensland was the second-biggest loser among the ASX200, falling 5.4 per cent to an almost three-year low of $5.47 after financial regulators APRA and AUSTRAC found deficiencies in its anti-money laundering and counter-terrorism financing program.
The regional lender has entered into an enforceable undertaking with them and has been required to add $50 million to its pool of operational risk capital.
In tech, enthusiasm for all things AI-related continued, with Weebit Nano and Appen rising by low double-digits and Brainchip climbing 3.4 per cent.
BetMakers Technology rose 20 per cent to 15c after the Melbourne-based business-to-business wagering tech company said it would reduce its workforce by almost a quarter to 440 staff in a bid to save more than $20 million a year.
In currency, the Australian dollar had fallen to its lowest level against its US counterpart since November.
The Aussie was buying 64.81 US cents, from 65.24 US cents at Tuesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Wednesday down 118 points, or 1.64 per cent, at 7,091.3.
* The broader All Ordinaries dropped 113.8 points, or 1.54 per cent, to 7,273.5.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 64.81 US cents, from 65.24 US cents at Tuesday's ASX close
* 90.47 Japanese yen, from 91.59 Japanese yen
* 60.71 Euro cents, from 61.09 Euro cents
* 52.41 British pence, from 52.84 British pence
* 107.92 NZ cents, from 107.96 NZ cents
