Australia: Shares hit near 7-week low as commodity stocks slide

AUSTRALIAN shares touched a near 7-week low on Wednesday (Sep 7), a day after the country's central bank raised rates, as a slide in commodity stocks and Wall Street weighed on the benchmark index.

The S&P/ASX 200 index dropped 1.1 per cent to 6,749.5 by 12.45 am GMT, extending losses for a second consecutive session, and hitting the lowest since Jul 21.

The Reserve Bank of Australia raised interest rates for a fifth consecutive time on Tuesday, sending its official cash rate to a 7-year high of 2.35 per cent. It also signalled that more hikes will be required to temper surging inflation.

"We see little reason to change our expectation that the cash rate will be above 3 per cent by the end of the year, especially when we consider the outlook for the labour market," analysts from ANZ Research said in a research note.

Meanwhile, Wall Street was volatile as investors weighed on aggressive rate hikes after a US services industry report reinforced expectations that the Federal Reserve will remain on track to raise rates.

Domestic miners led the laggards, falling as much as 2.1 per cent, despite higher iron ore prices. Index heavyweights such as Rio Tinto, Fortescue Metals and BHP Group dropped 0.9-3.2 per cent.

Energy stocks were also pressured by lower crude prices due to prospects of more rate hikes and weaker Covid-19-led fuel demand in China. Sector majors like Woodside Energy and Santos slid 2 per cent each.

The financial subindex slipped nearly 1 per cent, with the "Big Four" banks falling between 0.2 per cent and 2 per cent, respectively.

Investors' radar is now on the second-quarter GDP data, which will be released later in the day.

In New Zealand, the benchmark S&P/NZX 50 index fell 0.4 per cent to 11,552.8 points. REUTERS

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