Australia: Banks, miners drag shares lower as Fed sticks to hawkish tone

AUSTRALIAN shares closed lower on Thursday (Nov 3), after a hefty rate hike and hawkish messaging from the US Federal Reserve startled global markets, with rate-sensitive banking stocks and domestic miners leading losses.

The S&P/ASX 200 index fell 1.84 per cent to end at 6,857.9, after skidding 2.3 per cent in earlier. The benchmark ended 0.1 per cent higher on Wednesday.

The US Fed shifted the outlook on tightening from short and sharp to long and high, putting to rest any thought of a near-term pause, with Chair Jerome Powell saying it was “very premature” to think about pausing and that the peak for rates would likely be higher than previously expected.

“The interest rate anxiety continues to be the Achilles’ heel, not letting any recovery sustain for more than a week or so,” said Kunal Sawhney, chief executive officer of equity research firm Kalkine Group.

“Today’s downturn can be attributed squarely to the Fed’s 75 basis points choice, which was followed by tough rhetoric by Jerome Powell,” Sawhney said.

Heavyweight miners fell 3 per cent despite climbing iron ore prices. BHP Group, Rio Tinto and Fortescue Metals Group dropped between 2.9 and 3.7 per cent.

Financials also fell 1.5 per cent, with all of the “Big Four” banks losing between 1.2 and 1.8 per cent.

Asset manager Perpetual closed up 7.1 per cent, after it rejected a US$1.07 billion buyout offer from a consortium of overseas and local private equity and funds management firms.

Shares of grocer Woolworths Group fell as much as 3.5 per cent, as sales at its main Australian supermarkets unit contracted.

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Australian: Shares dive on hawkish Federal Reserve; Perpetual soars on rejecting buyout bid

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index fell 0.87 per cent to finish the session at 11,184.3. REUTERS