Australia: Shares set for worst month since March 2020 as Federal Reserve stance weighs

[BENGALURU] Australia shares erased early gains to trade modestly higher on Friday, pressured by gold stocks, as investors scoured for battered stocks that entered correction territory in the previous session on the US Federal Reserve's hawkish stance.

The S&P/ASX 200 index was up 0.3 per cent at 6,856.30, as at 2348 GMT, after advancing as much as 1.9 per cent earlier in the day.

The benchmark declined 1.8 per cent on Thursday, and is now more than 10 per cent below its August 2021 high.

The index was on track to lose more than 7 per cent in January, its worst month since March 2020.

The Fed said on Thursday it would likely raise interest rates in March and begin tapering bond purchase programme in the same month.

Investor focus is now at a meeting by the Reserve Bank of Australia due next week, where the central bank is expected to end its bond-buying programme but might wait until November to make its first interest rate hike in over a decade, a Reuters poll showed.

Australian miners added as much as 2 per cent on Friday as iron ore prices crept up on hopes of robust demand for the steel-making ingredient in China.

Heavyweights BHP Group, Rio Tinto and Fortescue Metals Group gained more than 3 per cent each.

Healthcare stocks advanced as much as 2.1 per cent to mark their biggest intraday jump in nearly six weeks. Biotech giant CSL gained 3 per cent.

However, a 4 per cent drop in local gold miners limited the gains in the benchmark, as bullion slid more than 1 per cent overnight after the greenback rallied on robust US economic data, which would strengthen the case for faster rate hikes.

Newcrest Mining slumped 4.1 per cent to its lowest since late-September as its quarterly gold output fell from year-ago levels while the top Australian gold producer also flagged weather issues and Omicron-led headwinds at its Lihir mine in Papua New Guinea.

New Zealand's benchmark S&P/NZX 50 index was down 0.3 per cent at 12,008.43, hovering near its lowest since Feb 26 last year. REUTERS