SYDNEY: Australian shares ended lower on Wednesday, tracking a Wall Street slump overnight, as investors awaited the Federal Reserve’s policy decision, while upbeat US retail sales data doused hopes of an early interest rate cut.
The benchmark index S&P/ASX 200 dropped by 1.2% to 7,569.9.
Data showed US labour costs rose more than expected in the last quarter amid a rise in wages and benefits, confirming the surge in inflation early this year would possibly delay a much-anticipated interest rate cut later this year.
Investors now await the Fed’s policy decision later in the day, which is likely to keep the cash rate unchanged, with attention focused on the timeline of US interest rate cuts.
Markets expect a 98.4% chance of the Fed holding the interest rates today, as compared to 90.7%, a month ago, according to the CME FedWatch Tool.
“We think the Fed comments will be skewed towards the hawkish side, but there could be some silver lining as crude prices have fallen considerably,” said Glenn Yin, head of research and analysis at AETOS Capital Group.
Glenn added the Reserve Bank of Australia could maintain a longer restrictive stance as well but less than the Fed since the economy and household consumption plummeted in consecutive quarters, thus reducing the pressure on the RBA.
In Sydney, miners led the fall, dropping by near 2% on weaker metal prices.
Mining behemoths BHP Group, Rio Tinto and Fortescue lost between 0.8% and 2.6%. Financials sub-index slipped by 0.7%, with Westpac , Commonwealth Bank of Australia and ANZ Group down between 0.4% and 0.7%.
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