Australia: Shares close at 8-month low ahead of US Fed meeting

[BENGALURU] Australian shares closed on Monday (Jan 24) at the lowest level in 8 months, with technology stocks and commodities leading the losses, as investors cautiously await potential hawkish signals by the US Federal Reserve at the policy meeting this week.

The S&P/ASX 200 index ended 0.5 per cent lower at 7,139.5 - its lowest close since May 27.

Miners skidded 1.4 per cent, with South32 falling 4 per cent after the diversified miner warned that Covid-19 curbs may further hit labour shortages at its flagship Illawarra mine.

Last week, Rio Tinto and BHP Group also flagged labour shortages. Rio and BHP slipped 0.7 per cent and 0.2 per cent, respectively.

Investors are cautiously awaiting the Jan 25-26 Fed meeting at which it is expected to confirm it may soon start draining the massive amount of liquidity that has supercharged growth stocks in recent years. Markets overwhelmingly expect a 0.25 per cent rate hike in March and 3 more by the year-end.

Australia's technology stocks fell to an 8-month low, losing 1.6 per cent, after Wall Street's tech rout on Friday saw the S&P 500 and Nasdaq log their biggest weekly percentage drops since the onset of the pandemic.

"The Australian market is more or less following the US and anticipating that the Fed will have some genuine policy shift," said Brad Smoling, managing director at Smoling Stockbroking.

Domestic consumer price figures due on Tuesday and a more hawkish Fed could also set the stage for the Reserve Bank of Australia next week where it may end its bond buying in February and reinforce market wagers for a hike as soon as May or June.

Home furnishing retailer Adairs slumped 21.5 per cent on weak earnings outlook.

On the other end, Uniti Group surged 9.3 per cent after the fibre infrastructure provider said "more than one party" have shown interest in buying the company.

New Zealand's benchmark S&P/NZX 50 index closed 1.3 per cent lower at 12,191.06.

Dairy exporter Fonterra sank 4.8 per cent, while Fletcher Building slid 3.5 per cent.

REUTERS