Australian shares log biggest fall in over three months

[SYDNEY] Australian shares recorded their biggest fall in more than three months on Tuesday (Sep 8), led by weakness in financials and mining stocks, as higher oil prices stoked inflation concerns and drove risk-averse sentiment among investors.

The benchmark S&P/ASX 200 index fell 1 per cent to 8,920.80 points, its lowest closing level since July 28. The index logged its steepest drop since June 4.

Oil prices gained after Iran threatened to retaliate against any new US attacks by targeting energy infrastructure across the Gulf, raising worries over supply disruption.

That helped energy stocks advance 0.2 per cent, with Santos and Viva Energy gaining 0.7 per cent and 2.1 per cent, respectively.

Rising oil prices are adding to inflation concerns, while investors are increasingly pricing in the risk of another central bank hike, creating a broader risk-off tone in the market, particularly in rate-sensitive sectors, said Kai Chen, director at MPC Markets.

The Reserve Bank of Australia (RBA) assistant governor Sarah Hunter said the board aims to cool the economy through higher rates, but downplayed concerns about the risk of a potential recession.

Swaps now imply a 67 per cent chance of a quarter-point rate hike at the central bank’s policy meeting later this month, up from less than 10 per cent a month ago.

Financials lost 1.6 per cent, marking their steepest drop since August 20. All the “Big Four” banks dropped between 1.3 per cent and 2.6 per cent.

Earlier in the day, a Westpac-Melbourne Institute survey showed consumer sentiment dropped sharply in September, underscoring growing pressure on households from concerns around the rate hike and higher fuel prices.

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“The key issue is that consumer conditions are clearly weakening, but inflation remains elevated enough that the RBA may have limited room to provide relief,” said Chen.

Miners shed 0.5 per cent, with both Rio Tinto and BHP falling over 0.6 per cent.

Technology stocks slipped 1.8 per cent, its lowest closing since July 28, with WiseTech Global and Xero losing 2.8 per cent and 2.6 per cent, respectively.

In New Zealand, the benchmark S&P/NZX 50 index fell 1.1 per cent to 13,792.90 points, logging its biggest drop since July 30. REUTERS