Australian shares hit six-week low as oil tops $100 on Middle East tensions

Australian shares fell on Thursday to a six-week low, with all sectors trading in the red, as escalating tensions in the Middle East pushed oil prices above $100 per barrel and intensified concerns about inflation.

The S&P/ASX 200 index was down 1.4% at 8,785.20, as of 0020 GMT.

The benchmark finished at its lowest point since July 27 on Wednesday. Global risk sentiment was hurt after Iran and the United States struck tankers in the biggest wave of attacks on shipping since the war began, threatening to worsen the disruption of energy supplies from the Gulf.

The oil shock has already fed into Australian consumer prices, most recently through a stronger-than-expected monthly inflation reading that has increased expectations the central bank will deliver a fourth interest rate hike this year.

Wagers show a 77.3% chance of a quarter-point cash rate hike at the Reserve Bank of Australia’s upcoming meeting later this month.

Financials declined 1.3% to hit their lowest point since mid-June, with all “Big Four” banks losing between 1.3% and 1.8%.

The major lenders have flagged that they are feeling the brunt of higher interest rates and recent tax policy changes on their home-loan application volumes.

Rate-sensitive real estate and consumer discretionary stocks added to broader losses, down 1.3% and 0.9%, respectively. The mining sub-index slipped 2.2% to hit a three-week low.

Shares of BHP, Rio Tinto and Fortescue touched their lowest levels in around a week. Among gold miners, Northern Star Resources and Evolution Mining declined 1% and 1.6%, respectively.

Energy stocks bucked the rally in crude prices to fall 0.3%, weighed down by a 0.3% decline in index heavyweight Woodside Energy.

The sub-index has, however, gained about 3.3% so far this week.

Healthcare stocks fell 0.8% while the industrials sub-index lost 1%. In New Zealand, the benchmark S&P/NZX 50 index edged 0.4% lower to a one-week low of 13,760.36.