Australian Shares Drop to Two-Month Low, Miners Lead Market Slump
By Keshav SinghChundawat
Market Overview and Key Drivers
Sept 11 (Reuters) - Australian stocks ended Friday at a more than two-month low, as miners led by BHP lost on weaker commodity prices, while a surge in oil prices over the week heightened inflation concerns and kept investors on edge.
Performance of the S&P/ASX 200 Index
The benchmark S&P/ASX 200 index fell 0.9% to 8,741.20 points, its lowest closing level since July 2. It lost 2.1% in the week, its steepest drop since mid-March.
Global Sentiment and Investor Reactions
Global investors shunned risk assets on the day on fears that higher oil prices and persistent inflation fuelled by the Middle East war could prompt further policy tightening.
"It's no surprise to see the market in a steep 'risk-off' mode with investors retreating to cash and defensive assets until we see some stability in the macroeconomic outlook," said Luke Winchester, portfolio manager at Merewether Capital.
Sector Performance
Mining Sector Slump
Heavyweight miners slumped 3.7%, their steepest drop since June 19, as copper fell after Reuters reported that the White House has yet to decide on refined copper tariffs amid officials' concerns that higher prices for the metal could raise manufacturing costs. [MET/L]
Major Mining Stocks
Major miner BHP slumped 4.1%, clocking its worst session since mid-June, while Rio Tinto shed 3.5%. Lithium miners Liontown and PLS tumbled 8.6% and 7.4%, respectively.
Oil Prices and Energy Sector
Oil prices eased but were still set for a weekly gain, holding above $100 a barrel on fears of prolonged supply disruptions. [O/R]
Macroeconomic Factors
Reserve Bank of Australia and Interest Rate Expectations
Over the week, hawkish signals from Reserve Bank of Australia governors, together with higher energy prices, increased expectations of further tightening.
Markets are currently pricing in 32 basis points of rate hikes by November and 39 bps for December.[0#AUDIRPR]
Bond Yields
Yields on both short-term and long-term Australian government bonds jumped over the 5% mark to their highest levels since mid-2011 as a global bond selloff took hold.
Other Market Movers
Financial Sector Gains
Limiting losses, financials advanced 1.1%, clocking their best session in nearly two weeks, after three straight sessions of losses.
New Zealand Market Update
In New Zealand, benchmark S&P/NZX 50 index fell 1% to 13,580.33 points, its lowest closing level since late-June.
Upcoming Economic Data
Investors are now awaiting the island nation's June-quarter GDP data to be released next week.
(Reporting by Keshav Singh Chundawat in Bengaluru; Editing by Harikrishnan Nair)
