Australian shares fell on Friday, as losses in healthcare and financials outweighed strong performances by resource firms, while risk sentiment was dampened on the likelihood of a prolonged aggressive policy stance by the US Federal Reserve.
The S&P/ASX 200 index closed 0.8% lower at 6,676.8 points, marking its second weekly loss. The benchmark closed 1% lower on Thursday.
Global risk appetite remained tepid as comments from a Fed official reiterated the US central bank’s motive to sustain its aggressive rate-hike path to curb runaway inflation, even if it induces a recession.
Riskier assets in the recent past have faced pressure from a stronger U.S dollar and Treasury yields as both are considered safe-haven bets in times of economic uncertainty.
“The fact that US yields continued marching higher yesterday and have extended those gains today is a clear sign that the markets know the Fed means business regarding rate hikes,” said Matt Simpson, a senior market analyst from City Index.
Analysts believe any recovery in the local market could be short-lived due to a rising interest rate scenario. “We may see a percent or two gain on certain days, and the next day that gain will disappear.
Sustainable recovery is unlikely in the near future,“ said Kunal Sawnhey, chief executive officer at Kalkine Group. Australian financials, which occupy one-third of the bourse, led the losses for the day with a 1.2% drop.
Australian shares end lower as recession fears loom
The “Big Four” banks slipped between 0.9% and 1.7%. Healthcare stocks suffered a similar fate, falling nearly 1%, with index leader CSL skidding about 1.5%.
The resources sector provided some respite, with the energy index jumping the most at 2%. Sector majors Woodside Energy and Santos rose 2.4% and 0.8%, respectively.
Similarly, the gold index advanced 0.4%, with Newcrest Mining and Northern Star Resources gaining 0.4% and 0.6%, respectively.
New Zealand’s benchmark S&P/NZX 50 index fell about 0.5% to finish at 10,782.4 points.
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