Australia: Shares drop 1.4% as miners drag, US rate-hike bets spook investors

AUSTRALIAN shares fell on Monday amid broad-based losses led by miners, with investors on edge about the prospects of a prolonged interest rate hiking cycle by the US Federal Reserve following stronger-than-expected economic data.

The S&P/ASX 200 index fell 1.4% to 7202.1 by 0020 GMT. The benchmark recorded its third consecutive weekly loss on Friday.

Data from the US Commerce Department showed that consumer spending in January exceeded analyst estimates, stoking fears of more aggressive rate hikes by the Fed.

Meanwhile, Australia’s major banks are lifting their forecasts for interest rates in the wake of a decidedly hawkish turn in the central bank messaging, and despite some downward surprises on wages and jobs data in recent weeks.

The Reserve Bank of Australia earlier this month flagged that additional rate hikes might be required to bring inflation under control.

Local mining stocks led losses with a 3.2 per cent drop on weak iron ore prices. Sub-index heavyweights BHP Group and Rio Tinto shed 2.8 per cent and 2.6 per cent, respectively.

Technology stocks tracked Wall Street peers lower, down 1.7 per cent. ASX-listed shares of Block and Xero lost 1.7 per cent and 2.7 per cent, respectively.

Healthcare sub-index traded down 1.4 per cent, with the biggest loser Imugene slipping 5.4 per cent.

Financials fell 0.3 per cent, but the “big four” lenders were marginally higher.

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Energy stocks dipped 0.8 per cent. Shares of sector heavy-weight Woodside Energy jumped 0.8 per cent after it reported a more than three-fold jump in annual profit, boosted by strong liquefied natural gas pricing in the wake of Russia’s invasion of Ukraine.

Rare Earth minerals explorer Lynas Rare Earths reported a 4 per cent drop in first-half profit, sending its sharing tumbling 2.2 per cent.

New Zealand’s benchmark S&P/NZX 50 index dropped 0.8 per cent to 11,806.09. REUTERS