The Fortescue Metals Group Limited (ASX: FMG) share price is currently tumbling a substantial 9.18% as the wider ASX share market experiences a major sell-off.
The S&P/ASX 200 Index (ASX: XJO) is down by 4.7% at the time of writing, so Fortescue shares are far from alone in this painful decline.
Looking at some other big names in the resources sector, these are also seeing some significant drops. The BHP Group Ltd (ASX: BHP) share price is currently sliding 5.9% and Rio Tinto Limited (ASX: RIO) shares are losing 5.6%. So, while all three big Aussie miners are well in the red on Tuesday, Fortescue shares are faring the worst by some margin.
What's going on?
Volatility has increased across global share markets amid concerns over how far central banks may need to go to bring inflation under control.
In the US, the latest monthly reading for inflation for May showed a year-on-year rise of 8.6%. For the month of May alone, the US inflation figure was 1%.
According to reporting by various media, including Bloomberg, plenty of traders now believe the US Federal Reserve will increase the interest rate by 75 basis points this week. Even if the Fed doesn't go quite that far, an increase of 50 basis points is now being widely predicted.
On top of that, there are market concerns that the strength of inflation and the likely response by central banks is leading to a higher chance of recession.
All of these factors are wreaking havoc on global markets and, in turn, sending the Fortescue share price plummeting.
Bloomberg reported on comments by Quill Intelligence chief strategist Danielle DiMartino Booth:
The idea that there is some Goldilocks outcome in the cards or soft landing is a mockery.
While tightening into a recession is no easy task, the Federal Reserve must indicate a willingness to raise interest rates by more than a half-percentage point at upcoming meetings if inflation continues to surprise to the upside.
Furthermore, falling iron ore prices amid fears over Chinese lockdowns are likely also dragging on Fortescue's shares today.
Fortescue share price snapshot
Despite Tuesday's heavy decline, Fortescue shares have managed to eke out a gain of just over 1% so far in 2022. This compares to a fall of around 11% for the ASX 200.
