Australia: Shares hit over 2-month low after Fed hike; banks drag

AUSTRALIAN shares closed at their lowest in more than 2 months on Friday (Sep 23), returning from a 1-day holiday, as banking stocks fell after the US Federal Reserve hiked interest rates and maintained its hawkish stance on policy tightening.

The S&P/ASX 200 index ended 1.9 per cent lower at 6,574.7 points, its lowest since Jul 1. The benchmark declined 2.4 per cent for the week.

The Fed lifted rates by an expected 75 basis points (bps) on Wednesday and signalled a longer trajectory for policy rates than markets had priced in, fuelling fears of further volatility in stock and bond trading.

“In today’s session, we are basically playing catch up on 2 US sessions which is why the ASX is in a huge sell-off,” said Azeem Sheriff, markets analyst at CMC Markets.

“Although the US and Australia have different levels of inflation, the principle remains the same that, inflation is still high and the impacts of rate hikes haven’t really flowed through yet to consumers.”

Markets have largely priced in a 50 bps hike in October, with 25 bps each in November and December.

Financials slipped 1.7 per cent to hit an over 2-month low. It slumped 1.7 per cent for the week and marked 6 consecutive week of losses. The country’s “Big Four” banks fell between 0.9 and 1.9 per cent.

Weak oil prices weighed on energy stocks that retreated 2.1 per cent on Friday and marked a 2.1 per cent drop this week.

Heavyweights Woodside Energy and Santos fell 2 per cent and 4.3 per cent, respectively.

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Australia: Shares hit over two-month low on Federal Reserve’s stance; banks, tech stocks weigh

Technology stocks declined 4.4 per cent, tracking an overnight fall in their Wall Street peers. ASX-listed of Block and software maker Xero fell 8.9 per cent and 7.8 per cent, respectively.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 closed 0.7 per cent lower at 11,434.82 points to hit a near 2-month low. REUTERS