ASX 200 Tumbles Below 9,100 on Rate Hike Fears and Retail Woes

The ASX 200 index plummeted 0.98% on Thursday to close at 9,038.20, weighed down by surging expectations of a Reserve Bank of Australia rate hike and disappointing earnings from major retailers.

The sharp decline was broad-based, with only two out of eleven sectors finishing in positive territory, as investors fretted over persistent inflation.

Rate hike fears intensified after the July inflation print showed headline CPI dropping to 3.5% from 3.8%, but the trimmed mean inflation rate remaining unchanged at 3.6%. Household spending rose a stronger-than-expected 1.1% in July, further bolstering the case for a hike.

The prospect of another rate increase has significant implications for the Australian economy, particularly for households struggling with elevated mortgage payments and cost-of-living pressures.