Australian shares drop on inflation fears; Northern Star slumps on output warning

Australian shares fell on Friday as surging oil prices linked to the Middle East conflict fuelled inflation concerns, while gold miner Northern Star plunged after flagging difficulties in reaching its annual production forecast.

The S&P/ASX 200 index was down 0.3% at 8,601.20 by 2333 GMT.

The benchmark has now lost nearly 6.5% over the past two weeks since the Middle East war began. Oil prices jumped on Thursday to their highest level in nearly four years as Iran stepped up attacks on oil and transport facilities across the Middle East.

Domestic cost-of-living concerns arising from higher fuel costs led markets to project a 78% chance of a hike at the Reserve Bank of Australia’s meeting on March 17, up from around 20%.

Northern Star Resources plunged as much as 16.6%, putting it on track for its worst session since late March 2020, after the company flagged operational setbacks at the Kalgoorlie Consolidated Gold Mines, one of Australia’s largest open-pit gold mines.

The slump weighed on Australian gold peers and the broader mining sub-index, which fell 4.3% and 1.8%, respectively, while lower gold prices dented appetite as the dollar firmed and bets on US Fed rate cuts eased.

The conflict, along with Northern Star’s slump, wiped out the gold sub-index’s gains for the year after it more than doubled in 2025 on a bullion price rally.

Financials rose 0.5% to limit overall losses, but were set for a third consecutive weekly loss, if the momentum perists. All “Big Four” lenders were in the black, gaining between 0.3% and 0.7%.

Energy stocks rose 1.1% on higher oil prices, though Karoon Energy lost 1.8% after saying Brazil had imposed a 12% tax on oil exports.

One of Karoon’s key assets, the Baúna Project, is in Brazil.

New Zealand’s benchmark S&P/NZX 50 index lost 0.5% to 13,133.31 points.