Australia: Shares end lower after Fed minutes, local jobs data

AUSTRALIAN shares closed lower on Thursday (Aug 18), tracking weakness in global equities, as minutes from the US Federal Reserve’s minutes suggested more rate hikes were likely, while mixed signals from local jobs data also dented investors’ sentiment.

The S&P/ASX 200 index ended 0.2 per cent lower at 7,112.80.

“To a degree, the ASX has been caught up in the bearish sentiment seen across equities since yesterday’s FOMC (Federal Open Market Committee) minutes, and today’s unexpected employment growth contraction has also weighed on the local benchmark,” said Matt Simpson, a senior market analyst at City Index.

Minutes from the Fed’s July meeting indicated there was “little evidence” that inflation pressures were easing, suggesting policymakers were committed to raising rates as high as necessary to tame rising costs.

Meanwhile, figures from the Australian Bureau of Statistics showed the jobless rate dipped to 3.4 per cent in July, the lowest rate since August 1974. The net employment also surprised by falling 40,900 in July, missing forecasts of a 25,000 increase.

“A decline in the number of employed people, following record highs, along with record number of vacancies, suggests labour market is tight. Reflecting this, wages are rising and we expect the RBA (Reserve Bank of Australia) to continue to hike,” analysts at Barclays said in a note.

The brokerage says the RBA could return to 25 basis point increments in September.

Heavyweight mining stocks fell 0.5 per cent after iron ore prices hit 3-week low. Gold stocks were the top percentage losers on the benchmark, slumping 3.8 per cent. Sector major Newcrest Mining fell 2.9 per cent.

Technology stocks tracked Wall Street lower and fell 2.4 per cent. Energy stocks emerged after 3 consecutive sessions of losses and gained 1.4 per cent on steady oil prices. Woodside Energy Group and Santos rose 1.1 per cent and 2.3 per cent, respectively.

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Australia: Shares drop as investors digest Federal Reserve minutes; jobs data in focus

Across the border, New Zealand’s benchmark S&P/NZX 50 index ended 0.3 per cent lower at 11,814.34.

A day after it raised cash rate by half point, Reserve Bank of New Zealand governor Adrian Orr said the central bank was confident domestic inflation was now tracking lower. REUTERS