Australia: Shares mark worst month since June on recession woes

AUSTRALIAN shares on Friday (Sep 30) posted a third weekly loss and their worst month in 3, as concerns over a potential global recession sapped risk appetite after the US Federal Reserve reiterated its aggressive stance to tackle inflation.

The S&P/ASX 200 index closed 1.2 per cent lower on Friday. The benchmark ended 1.4 per cent higher in the previous day.

Worries emerged after US central bank officials overnight said they will continue raising borrowing rates to arrest price pressures, even as recession worries and turmoil in global markets lingered.

Central banks from Australia and New Zealand are also set to raise their key policy rates by 50 basis points each in their October meetings in an attempt to tame red-hot inflation.

“We also expect the RBA (Reserve Bank of Australia) to ‘soften’ its message by removing the reference to ‘over the months ahead’ in the context of further rate increases,” analysts from ANZ Research said.

Financials led the laggards for the day, losing about 2.3 per cent and for a seventh straight week, with the country’s largest banks falling between 2 and 3 per cent.

“The (bank) index has been losing so much because investors are probably digesting the fact that elevated rates are likely to stay here, and it will be immature to call the terminal rate at this time,” said Kunal Sawhney, chief executive at Kalkine Group.

Technology stocks slipped 2.7 per cent and marked their third weekly loss. Accounting service provider Xero and ASX-listed shares of Block slid 4.3 per cent and 4.8 per cent, respectively.

Commodities provided some respite to an otherwise gloomy benchmark, with miners climbing about 0.8 per cent, as top steel producer China reported a ramp-up in its output due to rising construction demand.

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Australia: Shares set for worst month in 3 on recession risks

Rio Tinto, BHP Group and Fortescue Metals rose between 0.1 and 2.8 per cent.

Gold stocks also supported the resource-rich bourse with a 3.5 per cent jump. Newcrest Mining and Northern Star Resources advanced 2.7 per cent and 4.3 per cent, respectively.

New Zealand’s benchmark S&P/NZX 50 index fell 1.2 per cent to finish the session at 11,065.7 points. REUTERS