Australian shares plunge as rates pessimism sinks in

Investors have reacted negatively to the increased chance of another interest rate hike.

The Australian share market has plunged to a nearly four-week low in morning trade as the fallout from a higher-than-expected inflation readout continues to reverberate.

At noon AEST on Thursday, the benchmark S&P/ASX200 index was down 74.3 points, or 0.95 per cent, to 7,708.3, while the broader all Ordinaries had dropped 75.6 points, or 0.94 per cent, to 7,947.3.

In the first hour of trading, the ASX200 had been down as much as 1.6 per cent to 7,654.2, its lowest intraday level since May 31.

IG market analyst Tony Sycamore said earlier that the ASX200 was in "free fall" after Wednesday's consumer price index report increased the odds of another interest rate hike by year-end.

The ASX's Rate Tracker late on Wednesday was giving 37 per cent odds for an early August rate hike, up from a zero per cent chance a week and a half ago.

The ASX200 had recovered somewhat by midday and was just barely in positive territory for the month, up by a point and a half.

Still, every sector was in the red, with the interest-rate-sensitive property sector the biggest loser, dropping 3.2 per cent as a number of major companies traded ex-dividend.

The Big Four banks were all in the red, with NAB and Westpac down 1.6 per cent, CBA dropping 1.4 per cent and ANZ dipping 1.1 per cent.

Judo Capital Holdings was the biggest loser in the ASX200, down 7.3 per cent to a four-week low of $1.2425.

In the heavyweight mining sector, BHP was down 0.7 per cent and Fortescue had edged 0.1 per cent lower, while Rio Tinto had added 0.6 per cent.

In health care, Immutep had plunged 21.8 per cent to 34c as the biotech released what it described as positive results from a clinical trial evaluating using its immunotherapy candidate to treat head and neck cancer.

On the flip side, Baby Bunting had soared 23.9 per cent to a nearly two-month high of $1.53 after the baby retailer announced that trading had improved since May following the introduction of new product assortments and a renewed focus on new customer acquisition.

The Australian dollar was buying 66.53 US cents, from 66.84 US cents at Wednesday's ASX close.