At noon AEST on Thursday, the benchmark S&P/ASX200 index was down 52.9 points, or 0.67 per cent, to 7,795.6, while the broader All Ordinaries had dropped 56.1 points, or 0.69 per cent, to 8,053.8.
Late Wednesday night the US Bureau of Labor Statistics reported consumer prices rose 3.5 per cent in the year to March, up from 3.2 per cent in the year to February.
NAB head of market strategy Skye Masters said the readout put to rest hopes an uptick in US inflation in January and February was simply a "bump in the road" perhaps due to seasonal factors.
"It just really put into doubt expectations the Fed will start cutting in June," Ms Masters said.Â
Market reaction was swift, with US two-year Treasury yields spiking by a quarter of a percentage point, the S&P500 dropping one per cent and the US dollar jumping to a five-month high against a basket of other currencies.
Eight of the ASX's 11 sectors were lower at midday, with energy, materials and consumer staples higher. The interest-rate-sensitive real estate sector was the biggest loser, dropping two per cent.
Goodman Group had dropped 1.6 per cent, Westfield owner Scentre Group had retreated 2.7 per cent and retail owner GPT Group had dropped 2.9 per cent.
The consumer discretionary sector was down 1.2 per cent, with Wesfarmers falling 1.1 per cent and JB Hi-Fi down one per cent.
The Big Four banks were all well in the red, with CBA down 1.5 per cent, ANZ dropping 1.2 per cent, Westpac down 1.0 per cent and NAB falling 0.9 per cent.
The heavyweight mining sector was up 0.5 per cent, with BHP up 0.9 per cent, Fortescue 0.6 per cent and Rio Tinto 0.2 per cent higher.
Goldminer Northern Star had advanced 2.8 per cent to $15.425 after advising of higher costs per ounce mined, a metric known as all-in sustaining cost, as well as reaffirming its guidance for gold sold for the year.
"Cost pressures remain prevalent across our sector as well as costs linked to the buoyant gold price," the company said.
Looking ahead, the European Central Bank is expected to leave rates on hold when it meets later on Thursday, Australia time.
The Australian dollar had dropped to a 10-day low against its jubilant US counterpart, buying 65.16 US cents, from 66.23 US cents at Wednesday's ASX close.
10°C