Australia: Shares hit eight-month low on Federal Reserve rate-hike fears

[BENGALURU] Australian shares fell 1.3 per cent on Tuesday to hit an eight-month low as investors exited riskier assets on concerns of a quicker-than-expected rate hike by the US Federal Reserve, with geopolitical tensions and Covid-19 disruptions weighing further.

The S&P/ASX 200 index was down at 7,047.1, as of 2350 GMT, its lowest since May 24, extending losses into a third straight session.

Wall Street recorded a tumultuous session overnight as it closed higher after posting heavy losses earlier as the Fed, which begins its policy meeting later in the day, looks to unwind unprecedented stimulus and open the path for future rate hikes.

In Australia, financials were the top drags on the benchmark as they lost up to 2.1 per cent to their worst level since last April. Top lenders Commonwealth Bank of Australia and National Australia Bank fell 1.3 per cent and 2 per cent, respectively.

The energy sector declined 2.5 per cent to a near two-week low as oil prices fell 2 per cent overnight on a rallying US dollar.

Index heavyweights Woodside Petroleum and Santos dropped 1.8 per cent and 2.1 per cent, respectively.

The Australian mining sector slipped more than 1 per cent in its third straight loss, with global miners BHP Group and Rio Tinto shedding 1.2 per cent and 1.6 per cent, respectively, as iron ore prices dipped ahead of holidays in China.

Fortescue, the world's fourth-largest iron ore producer, fell 1.2 per cent as the company flagged pressures from strong demand for labour and resources, even as it posted a 2 per cent rise in its second-quarter iron ore shipments.

Meanwhile, Rio reached a deal with the Mongolian government to end a long-running dispute over the US$6.925 billion expansion project for the Oyu Tolgoi copper-gold mining project, a positive development just days after its lithium exploration licence in Serbia was revoked.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index traded marginally higher at 12,202.25, after declining as much as 0.6 per cent earlier in the day.

REUTERS