Australian shares posted their worst session in nearly two weeks on Monday, a day ahead of the central bank policy decision, while the country’s biggest gold miner soared on receiving a $16.9 billion buyout offer from Newmont Corp.
The S&P/ASX 200 ended 0.3% lower at 7,539.0 points, snapping three straight days of gains. The benchmark marked its worst day since Jan 25.
The Reserve Bank of Australia (RBA) is expected to deliver a fourth consecutive quarter-point interest rate hike on Tuesday, likely followed by another similar-sized increase in March as it fights an unexpected resurgence in inflation, a Reuters poll showed.
However, “a surprise 50bp hike from the RBA tomorrow could weigh on the ASX 200”, said Matthew Simpson, a market analyst at City Index.
Meanwhile, data showed Australian retail sales volume fell for the first time in a year in the December quarter as shoppers cut back spending on goods, a sign higher borrowing costs are finally working to curb spending.
“Weak retail sales in December has become a trend. But if we see continued weakness in January and February, it is a sure sign that consumers are feeling the strain of higher interest rates,” said Simpson.
Australia, NZ dollars nurse heavy losses after hot U.S. jobs data; RBA next up
Additionally, data on Friday showed U.S. job growth accelerated sharply last month while the unemployment rate was at its lowest in over half a century, pointing to a stubbornly tight labour market.
Australia’s largest gold miner Newcrest Mining jumped as much as 14% after receiving an initial takeover offer from U.S.-based Newmont.
Back home, financials declined 0.3%, marking their worst session since late January. The so-called “Big Four” banks fell between 0.1% and 0.7%.
Tech stocks dropped 0.7%, tracking their Wall Street peers lower. Accounting software provider Xero and ASX-listed shares of Block Inc dropped 1.4% and 2%, respectively. Meanwhile, the miners advanced 0.3% with Fortescue Metals Group, BHP Group and Rio Tinto rising between 0.05% and 0.9%.
Gold stocks closed 2% higher after bullion prices regained some ground.
Markets in New Zealand were closed for a pubic holiday.