Lithium company Lake Resources’ shares sunk 12.3 per cent amid news of a dispute with its collaborator for its Kachi Pilot plant.

Virgin Australia’s losses blew out almost $400 million in 2022, even though things improved at the end of the financial year as the aviation sector began to benefit from record demand for travel.

The carrier’s underlying loss increased more than fivefold to $386.7 million in the year to June 30, from $76.8 million in the previous year, financial results lodged with the Australian Securities and Investments Commission on Wednesday show.

US private equity giant Bain Capital plucked Virgin out of administration in November 2020. It’s expected the airline will land back on the ASX at some point in 2023.

In other news, fund manager Anton Tagliaferro - one of the local market veterans - said he’s set to retire from Investors Mutual next year after more than three decades in the industry.

Tagliaferro, a well-known “value” investor, on Wednesday said it was time for him to move on and hand over to the next generation of fund managers at IML.

“I know I leave our clients in safe hands with every confidence in the team’s ability to generate healthy returns moving forward,” Tagliaferro said.

On Wall Street overnight, the S&P 500 sunk by 4.3 per cent while the Dow Jones tumbled by 3.9 per cent and the Nasdaq plunged by 5.2 per cent. All three indexes notched their biggest one-day percentage drops since June 2020, according to Commsec analyst Steven Daghlian.

“Keep in mind that this follows a four-day, 5-per-cent winning streak for the US markets,” he added.

Bond prices also fell sharply, sending their yields higher, after the government report showed inflation in the US decelerated only to 8.3 per cent in August after peaking in June at 9.1 per cent. Economists had expected it to slow down to 8.1 per cent. The US dollar soared, hammering other currencies. The Australian dollar was trading 2.3 per cent lower at 67.32 US cents this morning.

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Seema Shah, chief global strategist at Principal Global Investors, said the Fed had left no ambiguity when it came to inflation.

“The Fed’s stance is quite clear. Due to the enormity of the inflation task ahead, a weakening economy cannot stand in the way of further monetary tightening, and rates will need to remain at a restrictive setting for a prolonged period,” she said. Investors thus had to “position [their] portfolios for a more sustained monetary tightening campaign.”

The worse-than-expected data means traders are bracing for the Federal Reserve to ultimately raise interest rates even higher than expected to combat inflation, with all the risks for the economy that entails.

“We now expect the FOMC (Federal Open Market Committee) to increase the Fed Funds rate by 75 basis points (with risk of 100 basis points) when they meet next week,” Commsec said this morning. “This is expected to be followed by 50 basis point rate hikes in November and December, to a peak of 4 per cent to 4.25 per cent.”

Fears about higher rates sent prices dropping for everything from gold to cryptocurrencies to crude oil.

“Right now, it’s not the journey that’s a worry so much as the destination,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “If the Fed wants to hike and hold, the big question is at what level.”

Investments seen as the most expensive or the riskiest are the ones hardest hit by higher rates. Bitcoin was 8.6 per cent lower at $US20,628 at 11:51am AEST on Bitstamp.

Apple, Microsoft and Amazon all fell more than 5 per cent overnight, and were the heaviest weights on the US market.

Traders now see a better than 60 per cent likelihood the Fed will pull its federal funds rate all the way up to a range of 4.25 per cent to 4.50 per cent by March. A day earlier, they saw less than a 17 per cent chance of such a high rate, according to CME Group.

“The Fed can’t let inflation persist. You have to do whatever is necessary to stop prices from going up,” said Russell Evans, managing principal at Avitas Wealth Management. “This indicates the Fed still has a lot of work to do to bring inflation down.”

with AP