Australian shares decline nearly 1% as BHP warning, rate fears hit miners, banks

[SYDNEY] Australian shares closed nearly 1 per cent lower on Friday (Jun 19), marking their steepest fall in two weeks, as sentiment soured after BHP flagged higher costs and hawkish policy signals from major central banks added to concerns over risk appetite.

The benchmark S&P/ASX 200 index ended 0.9 per cent lower at 8,828.70 points, logging its worst day since June 4.

Miners spearheaded benchmark losses, falling over 4 per cent, hurt by sector giant BHP Group while weaker commodity prices further dented market sentiment.

Shares of BHP fell well over 5 per cent after it warned on Thursday of cost overruns at its Jansen project and said it will book a US$2.3 billion charge.

“The market is reacting sharply to the immediate capital intensity... BHP’s capital allocation anxiety is being weaponised across the broader mining sector, dragging mid tier miners who are caught in the headline crossfire,” said William Taylor, COO and portfolio manager at ETF Shares.

A tumultuous week of policy decisions from the Federal Reserve and the RBA added to the pressure, with hawkish signals from both central banks dampening appetite for equities amid concerns the Middle East conflict could reignite inflation risks.

“The hawkish policy signals from central banks this week have forced a broader market de-risking...ASX is so heavily weighted toward banks and miners, any macro driven rotation out of cyclicals instantly manifests a sharp 1 per cent index drop,” added William.

Banks fell slightly lower but posted its best week in a month, with only NAB, among the “Big Three” banks ending in the green.

Gold stocks slipped 3.8 per cent, as bullion prices fell. The sub-index logged a 9 per cent gain this week, its best week in over two months.

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Across the Tasman Sea, the New Zealand benchmark S&P/NZX 50 index gained 1 per cent to 13,495.63 points. REUTERS