Australian shares hit over 1-month low as oil prices amplify inflationary woes

[BENGALURU] Australian shares closed at their lowest in more than a month on Monday (May 18), dragged down by mining and gold stocks after a slump in commodity prices.

At the same time, stalled Middle East peace talks lifted crude prices and fuelled inflation concerns.

The benchmark S&P/ASX 200 index ended 1.5 per cent lower at 8,505.30 points, its weakest close since Mar 31.

Miners fell 2.8 per cent to a near one-week low as commodity prices declined.

BHP and Rio Tinto dropped between 2.8 and 3.6 per cent.

Gold miners slumped 4 per cent, while real estate fell about 3 per cent and financials lost 0.3 per cent.

Defying the broader sell-off, energy stocks rose 2 per cent on strong oil prices, with Woodside Energy gaining 2.9 per cent. Santos rose 2.7 per cent to a one-month high, after achieving first oil from the initial phase of its Pikka development project in Alaska, US.

Oil prices rose after a drone strike set off a fire at a nuclear power plant in the United Arab Emirates, compounding global energy shocks, which have led central banks, including the Reserve Bank of Australia (RBA), to reassess and recalibrate their outlooks for growth and inflation.

Australia’s central bank raised its inflation forecasts and downgraded the outlook for economic growth in May, while raising its main cash rate by 25 basis points to 4.35 per cent.

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Mark Gardner, founder and CEO at MPC Markets, said: “The market was already fragile before today. The RBA just revised up its inflation forecasts, bond yields are rising globally and now you’ve got oil spiking because the Hormuz situation isn’t going anywhere fast.”

Tuas stood out as the benchmark’s worst performer, tumbling as much as 68.7 per cent to its lowest level since mid-September 2023, after Singapore suspended the review of the merger between its unit Simba Telecom and Keppel’s M1.

New Zealand’s benchmark S&P/NZX 50 index fell 1.6 per cent to 12,762.92 points, its lowest close since Mar 30. REUTERS