Equities savaged as interest rate expectations rise

Growing nervousness about rising interest rates across global financial markets spilled over onto the ASX on Friday, pushing the Australian sharemarket to its biggest weekly loss since 2020, as investors prepare for higher interest rates to control inflation.

Peloton shares plunged 24 per cent after a report suggested it had stopped production of its popular bikes. .

Friday's losses dragged the S&P/ASX 200 to a 2.3 per cent fall for the day and a 2.9 per cent decline for the week, pushing blue chips 3.6 per cent lower since the start of 2022.

The pressure was most acutely felt in the materials sector as Australia’s global miners fell sharply, with BHP down 4.8 per cent and Rio Tinto shedding 4.1 per cent.

The decline for local shares tracked a fall across Asian markets and came after US shares sank on Thursday, dragging the S&P 500 down 1.1 per cent to the lowest level since October.

Shares in Amazon fell 3 per cent while Peloton, behind the pandemic's hottest home fitness craze, dropped 24 per cent on a report indicating the company had paused the production of its bikes.

The decline in Australian shares also comes as economists anticipate a faster return to monetary tightening by the Reserve Bank after December employment data released on Thursday showed the jobless rate fell to 4.2 per cent before the omicron wave took hold.