SYDNEY: Australian shares slumped on Thursday to wrap up their worst month since March 2020, as fears grew that aggressive monetary policy tightening to control rising inflation would cause a sharp slowdown in the global economy.

The S&P/ASX 200 ended 2% lower at 6,568.10, shedding 8.9% this month in its third straight monthly drop. The benchmark also marked its worst quarter since March 2020. Top central bank chiefs on Wednesday reiterated their commitment to controlling inflation no matter what pain it causes, in order to prevent rapid price growth from becoming entrenched.

“Market sentiment in Australia is one of nervousness... the end of free money has been painful for equity markets,” said Damian Rooney, director of equity sales at Argonaut.

The Reserve Bank of Australia has already raised rates twice this year and promised to do more to control broadening inflationary pressures. The benchmark stock index lost a tenth of its market value in the first half of 2022 amid policy tightening, the Russia-Ukraine war, and fears of a recession.