Wall Street dives, setting the ASX up for heavy losses at open

US stock indexes fell in early trading Wednesday as interest rates nudged higher yet.

Tech-related shares suffered the biggest decline, the sector shedding more than 4.5 per cent off the back of a poor U.S. session. In theory, banks should do better if the Fed keeps raising interest rates and bond yields climb higher since it will make their loans more profitable.

Williamson said the month of October had traditionally been a tough time for investors, with major corrections in markets in the past during this month.

It sets up the Australian sharemarket for steep losses to open the session, with futures at 7:35am AEDT pointing to a fall of 109 points, or 1.8 per cent, at the open.

The ASX200 was below the 6000-point mark for the first time since early June, while the broader all ordinaries is down 116.9 points, or 1.9 per cent, at 6046.9.

Wall Street tumbled on Wednesday in a fast skid, with the tech-heavy Nasdaq leading the declines while the Dow fell more than 800 points and the S&P 500 index hit its longest losing streak in two years.

Markets have sold off in recent days as the rate on the 10-year Treasury note flirted with 3.2 percent - its highest level in seven years. But eventually the higher rates worry stock investors, as they tend to increase borrowing costs and cut into profit margins. "As stocks go down, tech goes down more than the stock market".

On Friday, federal data showed that the USA jobless rate fell to 3.7 per cent in September, it's lowest point since 1969.

USA stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses.

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The S&P 500 index sank 95 points, or 3.3 percent, to 2,786, its fifth straight drop. It's not just tech though, as all the FAANGs get walloped despite being in three different sectors now. Think of it this way, if the Treasury issues a $1000 bond paying 3 percent interest, investors will not pay $1000 for an older bond paying 2 percent interest.

SEARED: Sears Holdings nosedived after the Wall Street Journal reported that the struggling retailer hired an advisory firm to prepare a bankruptcy filing that could come within days. The stock fell 15 per cent to 50 cents. It was more than $40 five years ago.

The Federal Reserve has been gradually raising interest rates for more than two years as the US economy grows.

Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores. Bond yields move in the opposite direction to price. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent.

Consumer staples was one of the hardest-hit sectors, with names like Tiffany & Co.

Boeing shed 3.3 per cent to US$372.58 and 3M fell 2.2 per cent to US$205.77.

There were, however, slight lifts for Japan's Nikkei, which added 0.2 per cent, and Hong Kong's Hang Seng, which gained 0.2 per cent.

The CAC 40 in France dropped 2.1 per cent, Germany's DAX lost 2.2 per cent and the FTSE 100 in London fell 1.3 per cent. Investors see many of these countries as being vulnerable to higher US interest rates, which can pull away investment dollars.

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