Australia: Shares end lower on fears of more rate hikes

AUSTRALIAN shares closed slightly lower on Tuesday (Nov 15) as central bank minutes pointed to more interest rate hikes, with mining and energy stocks leading the decline on China Covid concerns.

The S&P/ASX 200 index ended 0.1 per cent lower at 7,141.6 after Monday’s 0.2 per cent fall. Last week, the benchmark rose about 3.9 per cent in its third straight weekly gain.

“Wall Street’s post-CPI (consumer price index) rally has fizzled out, and the ASX looked overstretched to the upside by yesterday’s close, which left it ripe for a retracement,” said Matt Simpson, a market analyst at City Index.

Minutes of the Reserve Bank of Australia’s Nov 1 meeting showed the central bank expects to increase rates further over the period ahead in its effort to establish a more sustainable balance of demand and supply in the economy.

Australia will report its wage growth figures for the third quarter on Wednesday, with analysts expecting a 3 per cent rise in wages from a year earlier, up from 2.6 per cent in the previous quarter.

“A hotter wage rate could destabilise the assumption that the RBA will soon pause its tightening cycle, whilst a soft print will simply reinforce the view that the RBA will continue with 25-basis-point increments.”

Mining stocks fell 1.3 per cent despite a rise in most base metal prices, as doubts about China’s Covid policy adjustments prevailed amid rising infections in the country.

Sector majors BHP Group and Fortescue Metals Group fell 0.2 per cent and 0.8 per cent, respectively, while Rio Tinto rose 0.4 per cent.

Energy stocks fell 0.9 per cent as oil prices declined, with rising Covid-19 cases in China sparking fears of lower fuel consumption from the world’s top crude oil importer.

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Australia: Miners, energy stocks drag shares lower as investors assess Fed comments

Financial stocks gained 0.3 per cent. Commonwealth Bank of Australia rose 1.3 per cent after the country’s largest lender reported better-than-expected cash earnings for the first quarter.

New Zealand’s benchmark S&P/NZX 50 index rose 0.1 per cent to 11,239.14. REUTERS