Australian shares slip as oil surge fuels inflation fears
- The S&P/ASX 200 index was down 1.3% at 8,633.10
Australian shares fell on Thursday, following a brief two-session recovery, as an oil price surge linked to the Middle East conflict heightened inflation concerns, dampening risk appetite and boosting expectations for a rate hike next week.
The S&P/ASX 200 index was down 1.3% at 8,633.10, as of 2337 GMT.
Oil prices climbed sharply as supplies from the Gulf remained constrained following ship attacks in the Strait of Hormuz, a key chokepoint for global crude trade.
As a result, markets have increased their expectations of an interest rate hike from the Reserve Bank of Australia next week, with the central bank likely to address rising cost-of-living pressures driven by higher fuel costs.
Markets quickly lifted the probability of a hike next week to around 78%, from under 30% early this week, with a further move fully priced by August.
Australian financials lost 1.2%, dragged by top lender Commonwealth Bank of Australia’s 0.7% fall, while ANZ fell nearly 2%.
Shares of leading investment bank Macquarie Group fell as much as 2.3%.
Miners lost 1.7%, pressured by BHP and Fortescue’s 1.4% and 1.8% plunge, respectively.
The sub-index was weighed down further by Australian gold sector, down 2.2%, with Pantoro Gold and Evolution Mining falling 4.5% and 2.1%, respectively.
Gold stocks, once ASX favourites after more than doubling last year, have erased most of their gains this year as the US dollar strengthened during the Middle East conflict.
Real estate stocks fell 2.5%, weighed down by data centre landlord Goodman Group, which dropped 3.6%.
Healthcare stocks slipped 1.3%. Technology stocks declined 3.6%, tracking overnight losses on the Wall Street, with software firm WiseTech Global tumbling 4.6%.
Energy stocks rose 1.4%, bucking the broader market trend as oil prices strengthened.
The sector has gained 22.8% so far this year after lagging the benchmark’s performance over the past three years. New Zealand’s benchmark S&P/NZX 50 index was down 0.4% at 13,236.46 points.