Energy stocks drag Australian shares lower; Santos slips as ADNOC-led bid collapses

Australian shares fell on Thursday, with energy stocks leading declines across sectors, as Santostumbled after an ADNOC-led consortium withdrew its takeover offer for the country’s second-largest gas producer.

The S&P/ASX 200 index shed 0.7% to 8,753.80, as of 0021 GMT. The benchmark fell 0.7% on Wednesday.

Overnight, the U.S. Federal Reserve orchestrated a widely expected quarter-point reduction in interest rates and indicated it will steadily lower borrowing costs for the remainder of the year.

Back home, recent domestic data has reflected robust sentiment across economic growth and consumer spending, with investors awaiting labour market data, due later in the day, to gauge its sustainability.

The data will also help choreograph interest rate expectations, with markets currently pricing a near 20% probability of a Reserve Bank of Australia rate cut in September, while traders are more optimistic about prospects for two reductions later this year.

Energy firms tumbled 5% and were set for their weakest day in over five months, tracking easing oil prices.

Santos fell as much as 13.6% after a consortium led by Abu Dhabi’s ADNOC withdrew its $18.7 billion bid for the company after months of wrangling over valuation and terms.

Larger rival Woodside Energy also fell 3.7%.

Heavyweight miners fell 0.7% as copper prices hit a one-week low overnight. Index majors BHP, Rio Tinto and Fortescue lost between 0.7% and 1.2%.

Rate-sensitive financials slipped 0.4%, with top lender Commonwealth Bank of Australia down as much as 1.5% and headed for a fourth consecutive session.

Gold stocks also declined 0.3% after the bullion retreated nearly 1%.

New Zealand’s benchmark S&P/NZX 50 index traded flat at 13,199.89.

The Kiwi economy fell 0.9% in the second quarter as U.S. tariff uncertainties and housing market weakness weighed, a sharper decline than the 0.3% contraction forecast by analysts and the central bank.