Australia: Inflation worries pull shares lower, financials top losers

[SYDNEY] Australian shares ended the week lower with financial and energy stocks leading the losses on growing concerns over rising inflation in the country.

The S&P/ASX 200 index fell 1.4 per cent to 7,323.7 points on Friday, marking its worst day and week since Oct 1. The benchmark had closed 0.3 per cent lower on Thursday.

Financials were down 1.8 per cent and marked their worst session in nearly a month with the "Big Four" banks falling between 1.6 per cent and 2.5 per cent.

Westpac Banking Corp was set to report full-year results on Monday, after Australia and New Zealand Banking Group kicked things off this week.

"Sentiment was battered by inflationary concerns prevalent in the Australian market after the country recorded an increase in core inflation to a six-year high level in the third quarter," said Kunal Sawhney, CEO of Kalkine Group.

Financial markets are now pricing-in a rate hike as soon as early next year, he added.

Shares had lost steam since inflation data on Wednesday with the Reserve Bank of Australia (RBA) skipping a key 2024 bond purchase the next day and effectively losing control of the yield curve spooking markets further.

Most sectors closed in the red with the energy index falling 1.8 per cent on subudued oil prices which were headed for their first weekly drop since August as supply concerns eased.

Whitehaven Coal fell 3 per cent to lead losses on the sub-index while Washington H Soul Pattinson closed 2.5 per cent lower.

Miners were also down 1 per cent on weaker iron ore prices.

Mining majors Rio Tinto, BHP Group and Fortescue Group lost between 0.6 per cent and 2.7 per cent.

Across the Tasman sea, New Zealand's benchmark S&P/NZX 50 index closed 1 per cent higher at 13,099.82 points with dairy producer A2 Milk rising 3.5 per cent.

REUTERS