Australian share market has opened sharply lower with falls with expectations of a us federal reserve interest rate rise

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FEARS of a US Federal Reserve interest rate hike has driven the Australian share market to its lowest level in two months, with all sectors closing in the red.

At 4.15pm AEST on Monday, the S&P ASX/200 index was down 119.6 points, or 2.24 per cent, at 5,219.6 points, and the All Ordinaries was down 121.4 points, or 2.23 per cent, at 5,319.1 points.

The September share price index futures contract was down 114 points at 5,211 points, with 93,328 contracts traded.

Investors dumped Australian shares after a big sell-off on Wall Street amid renewed speculation about the rate rise and a slump in oil prices.

Energy, materials, consumer discretionary and financial companies were the hardest hit.

A US rate rise should boost the Australian dollar which, in turn, will put pressure on resource companies as commodities are traded in US dollars. A near four per cent fall in oil prices also put pressure on the market with Rio Tinto, BHP Billiton and Woodside Petroleum all down.

Asian stocks tumbled Monday, as investors reacted to comments last week from a Fed official, who caught markets off guard by saying that interest rates could rise soon. Questions presidential candidate Hillary Clintons health also cast a shadow after she was diagnosed with pneumonia during the weekend.


Japans benchmark Nikkei 225 index lost 1.7 percent to 16,672.92 and South Koreas Kospi slid 2.2 percent to 1,993.55. Hong Kongs Hang Seng shed 2.9 percent to 23,401.21 and the Shanghai Composite Index fell 2.2 percent to 3,011.64.

Australias S&P/ASX 200 sank 2.2 percent to 5,219.60, while the Sensex in India dropped 1.4 percent to 28,411.39. Benchmarks in Taiwan, Thailand and New Zealand also fell.